Finding Houses For Your New Property Business

Last time we looked at Market research and one of the topics to be researched was properties that are currently available to rent in your locality. You can find these on your competitor's web sites and listed in the local press. Make a list of ALL the property available near you. It's an excellent exercise to type them out on your word processor and list them in order of price. Most property letting agencies list prices as PCM. That's price Per Calendar Month, though in some areas prices are listed on a per week basis, especially in and around London. Make sure when you compare prices, you are comparing like with like. You'll need to double check to see how the agencies list properties in your country, in your area.

As each newspaper ad appears, enter the new prices on your list in the correct position, cheapest first, most expensive last. What's the point of this? You are soaking up almost without noticing what a detached bungalow might be worth (rental wise) in one area of your town or district, or a two bedroom apartment in another. It's all part of building your knowledge into becoming THE local expert in property rentals. And when it comes to valuing properties for rental for real, you will already have a comprehensive register to refer to. True, these properties are not yours, not yet, but that doesn't matter, you can go to school on these valuations, and they will teach you a great deal.

But of course you need properties to let yourself, so let's get them. But where are you going to find them? They are out there and they are waiting for you, believe me, more than ever before. Here's where. 1. Do you or any of your friends or relatives have any property sitting empty? Has anyone you know passed away recently? If so what has happened to the house? Do you know of any property that has been up for sale for months and hasn't sold? Any of these could be your first instruction. Check out with the owners and casually ask them if they have considered letting. If a property is standing empty it is costing money. If it is let, it is producing money, and that's a big difference. And think about this. When people inherit property why are they always in such a hurry to sell anyway? The answer of course is money, they have probably never seen so much cash before, and can't wait to spend it on a world cruise and a German sports car. But what happens in a year or two when the money has gone? They are back to square one. Stoney broke.

But if the house is rented out, that property will generate money forever, not counting the fact that over time it will increase in value too. You can only sell a house once, you can rent it forever, and like everything else over time those rents will increase. If you know someone who is desperate to sell a house they have inherited, have a word with them. Point that out to them. Why Sell? Why do people sell? It is a mistake. If they are desperate for some cash they could always see the bank manager and take out a loan, but keep the house. It is a cash cow, always has been and always will be.

Secondly, why not rent out the house you live in now? What! Yes, I'm serious, you want property to let don't you? Why not start with your own? Perhaps the kids have grown up and left home and you are now bouncing round in a large 4 bedroom home. Do you really need all that space? You probably don't. So why not rent a smaller cheaper two bedroom bungalow to live in for a year or two, and rent out your house? You're not selling your home after all, and if you miss it that much you can always move back into it when the tenancy agreement expires. And if you are going to rent out your own home, make sure you value it highly, because there is no point in going to all that expense and trouble unless you are making money doing it. Right? Value it highly and if it lets, you make money, if it doesn't let, so what, you have lost nothing. I have done this twice and it worked very well for me.

But we want more, of course we do. Put on your walking shoes and get out and take a trip round the area. Take a notebook and visit all the sites where postcard ads are displayed. This might be at the post office, a works canteen, a supermarket, shopping malls, the newsstands, anywhere where small ads await you. It's common to find properties listed there. May be two or three on each site on a good day. Jot down the details and especially the telephone numbers and return home. Of course these properties are not yours either, but with a little effort they could be. How? By ringing the owners of course.

Cold telephone calling is not an easy thing to do, and should only be done when you are feeling at your brightest. Make a couple of notes of what you have to say before you call anyone, as we can all dry up on the spur of the moment. Smile, and ring them up. You don't have to see a person to know if they are smiling, you can hear it in their voice, and don't we all prefer to deal with cheerful attractive people? Everyone's attractive on the telephone! You ring, and the person answers. Imagine it is someone advertising an apartment to let for £500 per month. Be polite, say good morning, be honest and upfront and tell them that you have recently started a new lettings agency, that you have good tenants waiting, (you will have the moment you begin to advertise, and I'll come back to that.) and that you might be able to let their flat. Sit back and wait for their response!

Some landlords will not speak to agents under any circumstances. Some landlords would not do business with an agent even if you offered them £10,000 per month and free beer forever. Life's like that. Landlords are the same as the rest of us, some are open-minded and will consider any reasonable suggestions, others are closed minded and stupid, some are downright rude, abusive even. Good luck to them. All you were trying to do was help them let their property, and if they couldn't see that, it's their loss.

Some landlords might say "no I need £500 just to cover the mortgage so I couldn't afford to pay an agent fee on top." That's OK, you could pay them that £500 per month, if you let the property for £550 per month, (allowing for your 10% commission)and that's so close to their price as makes no difference. Suggest putting the flat on your books for £550. At this stage all you want is the instruction. In the initial period price is secondary. Get the instruction first, and then worry about letting the property afterwards. Tell the landlord you would be happy to put it on for £550, and as it will be on the basis of no let - no fee, what has the landlord got to lose? Nothing, in effect they are employing you for FREE, they only pay you anything if you succeed. Most intelligent people could see the merits in that.

And then there are the amateur landlords who have no idea what they are doing. Perhaps they have inherited granny's house, and they really don't want to sell it, but on the other hand they are too busy to be chasing round after tenants all day. Perhaps they don't know how to find tenants, or how to reference tenants. Not everyone knows this, don't imagine they do. These landlords are precisely the kind of people you are looking for. They are the perfect client for you and when you come across them, court them furiously. You could solve all their property problems for them, and make some money for yourself. Suggest they might like to meet you at the property that is to be let.

If they show any inclination to do this, make an appointment to go and see them as soon as possible. Don't make the appointment for next week; don't make the appointment for tomorrow, what about this afternoon? What about in twenty minutes? Enthusiasm is everything. Huge & Impressive probably couldn't meet them in half an hour, but you could. Take your camera and ask if it is OK to photograph the house. Take your diary and note everything that needs noting. You don't need to measure the rooms, no letting agency does that, don't even consider it, as it would be a waste of time and could cause you headaches in the future if you made a mistake.

Remember, you will do anything within reason to land that property, and if it includes going out in the rain in ten minutes time, then do it. You can do exactly the same thing by ringing private small ads you see for property to let in the local paper. Ring them up, introduce yourself and offer your services. Offer them a small discount if need be. But remember this, you will be backheeled many times, rejected, but hey so what? You will also be invited to take it further plenty of times too, I guarantee it. Why? Simple, because there are so many new and amateur landlords out there, many of whom have property standing empty, and many of whom simply cannot afford to have no revenue. If they do, they run the real risk of the house being repossessed if the mortgage isn't paid. Not all landlords are rolling in cash, it's very easy to get into buy-to-let property, but sometimes very difficult to get out of it. These landlords are trapped, they HAVE to let the property and that is why many will be only too pleased to hear from a cheery character (You!) who might solve all their problems. Be persistent, keep at it, and once you have put together three or four properties you will be a step closer to truly launching your business.

It is important that from day one that you include actual properties to let in your initial ads, because that is the main reason most of your potential customers will read your ad, to see what you have available. Be creative, be enthusiastic, be clued up and confident, and you will attract properties and you will let them. Believe me, there are many desperate landlords out there and they will instruct you if they think you might shift their empty houses and apartments.

Take another look at the other agent's ads that run week-in-week-out in the local papers. They can only afford to pay for these ads because they are producing the business. But a word of caution here. All property advertising always produces less response than you optimistically imagined. But that's OK, because every property you sign up and rent out will produce for you around a £1,000, up towards $2,000 in revenue over the year, some more, some less. So you don't need to sign up and let tens and dozens from each ad, nice though that would be. If you can sign up two or three in a week, and let one or two of them when you are starting out, then you are doing very well, and your business will grow surprising quickly.

If you rent just one property a week you'd be on target for more than fifty successful lets by the end of the year. If you do that you are on target for a £50,000 per year income, (almost $90,000) and that is before all the other revenue streams that you can tag on that we will look at a little later. Yes I know you will have expenses, but what business doesn't? I let twelve properties in one month during my first year, and you can imagine how delighted I was with that, and there is absolutely nothing to stop you doing the same.

Just the opposite in fact, because as I said earlier, there are more properties to rent around the world today than there has ever been before, and more people seemingly wanting to rent them. Yes there is competition, of course there is, but you are on the way to becoming THE expert on rental property in your area because you are studying everything there is to know, and because YOU are far more enthusiastic than your tired rivals who don't really care whether they miss a particular property or not.

Look out for the next article in this series entitled "Finding Tenants For Your Property Business" and good luck with your business in the future.

How To Start Your Own Property Letting Business With Little Capital

Starting your own property business from home with little capital can be done, and this enterprise can be built into a substantial company in quick time if you really work at it, and go about it in the right way. If you don't have any property of your own, it doesn't matter, as initially we concentrate on letting other people's property.

But first things first. You need to decide on the name for your business, then set targets and goals, and thirdly you must carry out adequate Market Research (MR). All these are very important to the future success of your business. Don't skimp, and don't rush it. Your name first. What are you going to call your organisation? Most property agencies choose either to operate under the principal's name, e.g. Jack Jones & Co and then may add the word "Lettings" or "Property", or alternatively a completely different name to your own, such as Oak Properties, or Star Rentals, or Hufftown Lettings. Hufftown is where you live, for the purpose of this article.

Take a little care and time over your choice, because it is very difficult and expensive to change the name at a later date. Have a look in the local papers and see who is operating already. You wouldn't want to choose Hufftown Rentals if there is already a Hufftown Properties operating locally. That would only confuse and annoy people unnecessarily.

Another thing to bear in mind is a website address. Sooner or later you will need a web presence and it would be nice if the name you choose were also available to register on the Internet. For example, imagine you were toying with the name Oak Properties. I've just run a check to see if Oak Properties is available on the net. As it happens it isn't, but Elm Properties and Ash Properties are, so it might be sensible to choose a name where you can immediately bolt on a website address. By the way I use Lycos to check. They are a massive first-rate company and yet their prices are very reasonable. You can register a co.uk name for as little as £1.99 and that is cheap. Ten years ago that would have cost fifty quid. You can quickly check out if the name you want is available at http://www.partnershop.co.uk/shop/1598 .

If you find a still available web name you like, register it ASAP. You don't need to use it immediately, but once you've got it, it's yours. Names are being snapped up all the time, and you might be surprised at how few suitable names are still available. Once you have decided on a suitable business name, test market it on a few people. Ask the kids, or your family. They will soon tell you if it's too cheesy or naff! You want a name that is easy to remember, that you are comfortable with, and reflects what you do.

So we've decided a name. Let's call ourselves Little & Keen, Property Letting Agents. Onward, to setting targets and goals. Let's set ourselves a modest little target too. Let's aim to become the Biggest and Best letting agency in Hufftown! There is no point in setting targets too low is there? Set them high, aim high. No one wants to achieve a piffling goal. And a time scale too, what shall we say, 10 years? 5 years? How about 2 years max! That's it, our target is to become the biggest and best letting agent in Hufftown within 2 years. We'll start from home to keep costs down, and we may well stay at home, but that doesn't matter. It's a tough target, but by no means unachievable. So let's get started, time is of the essence.

Task 3: Market research. What are we researching and where? These are the things you need to know. Who are your competitors? What do they charge their landlords and their tenants? Where do they advertise? Do they have a website? What properties do they currently have available for rent? What rental cost are they? What are your competitor's weaknesses and their strengths? And how are you going to find out these things? You're going into mystery shopper mode, that's how.

Imagine you have applied for a job at the CIA or MI5 and as a test they have set you that same little task to complete, to obtain all that information within 3 days (always and only by legal methods.) You'd do it wouldn't you? Your job application depends on it; course you would. Get yourself a large sheet of paper and a ruler and make a chart. Primitive I know, but effective. Sometimes pencil and paper is still better than technology.

In the left column list all the competitors you have discovered in your area. Your local paper is a mine of information. Leave the bottom line free for your own business name. You can fill that in when you know what you are up against. Column two is for how much each agency charges their tenants. By the way you can only charge a tenant to process their tenancy application. You cannot charge a tenant just to register their requirements. That is illegal and a definite no-no. (That's the law in England, don't know about elsewhere, you would need to check that.)Column's three and four are how much the competition charge their landlords. Column five is their website address, and column six for any other relevant notes. Now you know what's required, let's dig! Do you perhaps feel a little uncomfortable prying into other business's affairs? Why? Don't!

It's normal business practice to strictly monitor the competition. To not do so would be foolish in the extreme. Tesco's monitor Sainsbury's who monitor Asda-Walmart every single day of the week. Indeed Tesco even boast of their website where they advertise and compare prices on thousands of products within their rival's stores. Do you think Sainsbury's and Asda willingly supply this information? I doubt it. It's market research, and it is what you are doing here.

The first place to find information is on their websites. You can glean an enormous amount of market intelligence through your rival's (and yes these companies will soon be your rival's) websites. You'll be able to fill in and complete quite a few of the boxes on your chart, but probably not all. You might then need to put on your best shoes and smile, and head down to the town and raid their shops.

Some agencies will pester the life out of you as soon as you walk in. They'll want to know everything about you, you might need to be creative, while others will let you pick up all their brochures and lists, and might not even look up from their vitally important work. When they do speak to you, what do you say? The truth of course. Tell them you are considering buying a buy-to-let property and renting it out, and do they have any information that you can take away and browse at your leisure. Most agencies have information in spades. You will be burdened with all the guff 'n stuff they'll give you. Take it all, the whole blinking lot and return home and read it thoroughly from cover to cover. You'll learn a great deal about property letting through these papers alone.

And is that a fib you told about buying property? Of course it isn't. You ARE thinking about buying and acquiring your own properties, and if you aren't, you jolly well should be, otherwise what are you doing in the property business? Your ambition must be beyond simply working for others. As soon as you have the necessary deposits you will consider buying, of course you will.

You return home and gleefully complete your chart. It's looking good, almost every box is filled, except yours at the bottom of the page. You now know how much all your competitors are charging for their main services, so how much are you going to charge? Undercut them of course, massively! NO, YOU ARE NOT, because you don't need to and no one ever made a great deal of money by massively undercutting. You have several important advantages coming your way, so make the most of them.

In England the first advantage is that you are not registered for Vat. You don't need to be until your turnover tops £60,000, and that's fee turnover not rental turnover. It will be a little while before you need to register for Vat, so make the most of your Vat holiday - it won't last forever. So if your competitor is charging 10% commission to their landlords PLUS Vat on collected rents, if you charged the SAME percentage fee, without the VAT, you already have a significant pricing advantage. Imagine a property is let at £1,000 per month, (nice easy figure) and you both charge 10% commission. The landlord would receive from you £900 net. But from Big & Swanky, your local puffed up rival, the landlord would only receive £882.50. A small advantage you might think, but over a year that tots up to £210, and if the landlord had ten properties, it's then £2100.

Landlords rent out property for one reason and one reason alone, and that is to make money. They notice things like that, believe me. If you are cheaper, they will start to become interested in you. You could in your initial period always reduce your price slightly by say 1% to attract extra instructions. You could do the management for 9%, that's perfectly possible, and it would make quite a difference to a landlord with multi properties. But be careful about reducing your fees too much. You'd be much better off thinking of ways to increase fees. It's your first USP, Unique Selling Point, courtesy of the Vat man. You're Vat FREE.

Most property Agents offer two separate services. Find a tenant only, OR Find a Tenant and Manage the property on an ongoing basis. Make sure you have the two distinct services clear in your own mind, for if you are confused, your landlord will certainly be too. Service A is to locate and reference a suitable tenant, prepare the paperwork, collect the first month's rental and deposit, book them into the property, take a fee and Bob's your uncle, that's it. (Yes I know there are other matters to think about like gas safety and reading meters but we'll come back to that). It's quick, it's clean, and you have no ongoing worries or responsibilities. But after your one-off fee, you have no ongoing income either.

Service B is much better from that point of view. Here you find and reference a suitable tenant, prepare the paperwork, you book them into the property, and then you manage it on an ongoing basis. That means collecting the rent forever, and a fee every month for doing so. Some tenants stay in the same property for twenty years, more than you might think. All you have to do is check the property occasionally, and generally oversee that the letting is running smoothly and satisfactorily for both parties. If you can keep increasing the number of properties you manage each month, you will see your fee total, your income, steadily rising. These regular fees will also provide you with fallback income which is especially reassuring when times are quiet.

Think back to your chart. Column 3 is for your competitor's charges to landlords for finding a tenant only; column 4, their charge for ongoing management. Two distinctly separate things. Don't confuse them. Once you have completed your chart, you can pencil in your own charges. You now know how much you will be charging your clients and how much you will be receiving on any particular let, from landlords and tenants, they BOTH pay you fees. Incidentally some agents charge a set fee for Service A, find a tenant only. Perhaps £300, or a fraction of the monthly rental, say half or three quarters of a month's rent. Half of a thousand pounds is obviously preferable to a set fee of £300. Make sure you set your fees as HIGH AS YOU POSSIBLY CAN, while always remaining competitive.

Think about it, check and recheck what Big & Swanky charge, and Sleepy & Dull too. Then fix your prices accordingly, and remember they are NOT cast in stone. You are a small independent. You can always haggle and/or adjust your fees at any time as it suits you. Big & Swanky would probably have to have three board meetings and refer to head office before they could or would amend theirs. It's another advantage of being small and independent, of owning your own business, of controlling your own destiny. You can be quick on your feet, you can compete at all levels.

Look out for the next article in this series entitled "Finding Properties To Rent" and best of luck with your business.