The Flip Side: Self-managed vs. Fully Managed Options
Self-managed vs. fully managed roles—which option should you decide? It really depends on your preferences.
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For the novice up-and-coming landlord, there’s usually a simple blueprint in mind — buy your property, find a letting agent to manage the tenant, then sit back and watch your profits roll in. Right? RIGHT? Er, not quite.
- basic landlord duties and
- your energy
Will all fall into the equation.
Whilst the dream may be to relax and let passive income roll in, any landlord will know it’s not quite that simple. But, in the quest to relax with a cocktail on a desert island, do you bite the bullet and put in the hard graft now with a self management plan, or battle on with management options, hoping to strike lucky?
We’ve weighed up both below.
Contemplating whether you should dive into the self-management role? The option may sound alluring from a cost perspective, but it’s important to understand the ins-and-outs of the game as well. Let’s take a look at the flip side of the coin before you decide to go solo.
Firstly, let’s define self-management. Simply put—you’re placing yourself fully in the driver’s seat, and it’s a BIG BUS. Not only are you the landlord, you’re the head of compliance, legislation management, maintenance, finance, HR and customer service. There’s no getting away from it, you’ve got lots of hats to wear.
The phrase jack of all trades, master of none may spring to mind among the cynical, but don’t be too hard on yourself. You undoubtedly know more than you think you do, and let’s be honest, who do you trust more with quick-draw hat swapping – yourself, or an agent who doesn’t know one end of your portfolio from the other (and realistically, probably doesn’t REALLY care)?
So, what do you need to consider if you are looking at this option?
You need to equip yourself with a decent understanding of the legal requirements that you need to abide by. These differ depending on what type of property you have, and where the property is located. HMO landlords have a slightly tougher job of it, and regional differences can make it tricky if you have a portfolio spread across the UK.
So make sure you are familiar with the landlord laws you need to be mindful of. There’s plenty of ways to keep up to date – free training webinars (we have a cracking selection), regional landlord meetings and keeping in touch with other local landlords can be greta ways to keep abreast of any changes, and often offer opportunities to ask questions and clarify anything that is niggling.
Don’t let things slide
It would be easy, without any agents getting involved, to let the important things like tenant referencing, inventories and decent photography to fall by the wayside. However if you are self-managing, these vital steps are more important than ever. You need to have every tool available to you in your arsenal to make sure that you are protected, and simple safeguards like a rigid reference check is key!
The beauty of being in charge of your own destiny though, you have options. There’s thousands of landlord products available and you aren’t tied to none. So have a mooch, compare some prices, go with who feels right. But whatever you do, GO WITH SOMEONE.
Have a team to hand
Whilst in an ideal world, you’ll be able to swoop in, toolbag in hand, and fix any problem your property can throw at you, realistically, maintenance is a pain, and you need professionals on hand to make sure it doesn’t spiral out of control.
Your property’s gas, electrics and water supplies all need to be professionally managed, if something goes wrong, you could find yourself in a real bind. So unless you are a qualified gas engineer, electrician and plumber as well as a landlord, don’t even think about attempting anything yourself. Instead, make sure you have reliable people on hand to step in when it gets real.
Don’t be afraid to ask your tenant for recommendations though. After all, they live in the area, and have possibly had to tackle issues before. If you don’t have a plumber to hand when a pipe goes pop at 2am, they may well do. Work together it makes life a lot easier.
One of the main benefits of a managing agent is that they stop the 2am calls from your tenant. However, if your tenant calls at 2am, it’s probably because something is going VERY WRONG. And if something is going very wrong, wouldn’t you like to know about it as soon as possible? Being accessible to your tenant on the phone allows you to deal with issues as they crop up, rather than them having to be batted between tenants, agents, maintenance teams, and back to you – all the while, that popped pipe is peeing all over your floor. Cutting out the links may mean you have some awkwardly timed calls to manage, but it could just make life easier in the long run. It all really depends on how happy you are to have the potential disruption.
Polish up your people skills
Letting and management agents don’t deal with property. They deal with people. And people can be emotional. They can be sad, they can be angry, they can be in a bad place, they can be jubilant and want to share why. You may not know why your tenant wants to put in their notice or why their rent is late this month, but your agent will. They’ll know what’s happened in their life to get them to this point, and how it is impacting them moving forwards.
This can be one of the hardest decisions to make when you are working out if self-management is for you, but it’s an important one – it may take some soul searching, but think carefully about it. Compassion is a vital component for success in the property game, and if you don’t think you can be empathic towards your tenants, do them and you a favour, and leave it to agents.
Going solo can make you feel completely empowered, king of your castle, ruler of your own destiny. But for many landlords, it’s a scary prospect. There is no denying that there is potentially a hell of a lot more work involved, and it can be a royal pain in the ass to get right initially.
So for many, especially those with busy lives, regionally spread portfolios, or careers outside of property, handing the keys over to a management agent may be the preferred option.
But what do you need to consider if you’re looking at this option:
Is silence golden?
A fully managed portfolio should mean no awkward phonecalls from your tenant’s neighbour at midnight, highly irritated that your tenant’s dog is barking. And that is brilliant. Nobody wants that. However, if your tenant is ringing at 3am to tell you that the house next door is on fire, you may well be more interested to know. If you have a management agent, these calls should be filtered, and you should never have to hear about the nocturnal barking dog.
However, maybe you DO want to know about the dog… it may not mean a lot as a stand alone incident, but a few calls about Rover’s night time antics, and that starts to become an issue. That’s then something that can be attempted to be nipped in the bud before it escalates.
Being clear with your agent what you want escalating to you, and asking for a regular update of any contact about your property may not help you become completely hands off, but may help prevent unnecessary tenant churn and pricy legal kerfuffle (legal kerfuffle is always pricy, whatever they tell you).
An A to Z solution
One of the massive benefits with using a managing agent is that they look after proceedings from start to finish. They find you a tenant, look after that tenant, deal with any hiccups that arise, and if things turn sour, evict the tenant, and find you another one. Simple!
What a joyous thought. No faffing about with :
And yes, it CAN be that simple. Finding great tenants is easy, if you put the effort in, and many managing agents are great, caring as much about finding the right match for your property as you do (after all, the better the tenant, the less work for them, right)? But ask yourself this, would you sign over your most expensive asset to a stranger, on the say so of a stranger under any other circumstance? Giving your managing agent carte blanche to slot people in without any involvement is a bad move, this is an area where you need some input!
Yup. Here it is. The cost.
There’s no getting around it, there’s a cost to managed services. For some, it’s worth every penny. Find a great agent, and any cost you pay is outweighed by the relief of not having to deal with any faff when you’re just trying to relax with a cup of tea and a sodding HobNob. And that is totally understandable.
For others, paying out for an agent to do potentially not very much is irritating, but they feel they have no option. Geography, time, other commitments may be conspiring against them, and whilst they may be frustrated, it may still be the best option.
So what’s better self managed or commercial property management?
Ultimately, the decision to take on a managing agent, or tackle the challenge yourself is yours and yours alone. It all really depends on what you’d like to pile onto your plate, because only you know what you can swallow.
Here at Mashroom we’re happy to encourage and guide you in taking the next steps in your managing endeavours. If you’d like more information on how we work or how we could help you save time and money, book a 10 minute consultation with one of our lettings experts or contact us at our link HERE.