If you’re new to the buy-to-let market, one of your first questions will likely be whether you should self-manage your property or get a letting agent to deal with your tenants and any issues that pop up during their tenancy. There are several pros and cons for each option and what’s right for you depends on your personality, how much time you have and how familiar you’re willing to get with tenants’ rights and other legislation, basic maintenance work and your tenants themselves.
To help you figure out which option is right for you, we’ve put together a guide below to the positive and negative aspects of both self-management and working with a property manager. Read on to discover what you can expect from these two options.
Self-managing property – the positives
The most obvious pro for self-managing your buy-to-let property is that it’s cheaper: there are no payments to a letting agent or other ongoing management fees. If you’re interested in making buying and renting out property your full-time job, self-managing allows you to build the necessary skills for this without your income revenue taking a hit.
Additionally, if you enjoy dealing with people of all kinds and taking on simple DIY projects and repairs around the house, self-managing your rental property could be very enjoyable for you. Many people really enjoy being a landlord and if you suspect that this might be you, it’s worth a try managing your property by yourself for a time to see how you like it.
Self-managing property – the negatives
Going the DIY route does have its challenges, too – otherwise, everyone would be doing it! First of all, it can be very time-consuming, from finding tenants to dealing with their everyday requests and any issues around nonpayment of rent.
Even more importantly, inexperienced landlords can run into problems if they don’t do their homework on legislation around tenants’ rights and landlord responsibilities – this can mean that you inadvertently break the law, which could come at a high price if legal action is taken against you.
You also have to make yourself available 24/7 in case of emergencies. While carrying out the legally required regular maintenance and safety checks will help mitigate the risks of major disasters, you need to expect the unexpected: a burst pipe, heating not working or damage to bathroom plumbing are all issues requiring urgent attention.
To help minimise the risk of getting woken up in the middle of the night by something maybe only your tenant sees as an emergency, compiling a manual for your tenant on how to deal with different urgent issues can be helpful. And remember that you’re legally obliged to give 24 hours’ notice to your tenants in writing before visiting the rented property.
Hiring a letting agent – the positives
One of the best things about working with a property manager is that it removes your need to try to become an expert in property legislation or managing relationships with tenants – this is the bread and butter of professional letting agents. This means you’ll stay compliant with all the relevant legislation and have more time to focus on other things – whether that’s your day job or further building your property portfolio.
You’ll also not have to worry yourself too much with the nitty-gritty issues that pop up as your property manager will be the contact person for your tenants. They will also deal with hiring tradespeople for maintenance issues, doing maintenance and safety checks and dealing with charging rent and dealing with any late payments.
While some months, self-management will only consist of a simple check to see that rent has been paid, other months there might be major maintenance work that needs to be done, antisocial behaviour from your tenant or difficulties in getting them to pay their rent. This is when a professional property manager can save you countless headaches and hours of work dealing with issues.
Hiring a letting agent – the negatives
Of course, working with a property manager isn’t free and it will make a dent in your rental income. In general, a property manager providing a full service will charge a percentage of your rental income – something between 7% and 15% is typical – as well as potential added fees at the start and end of tenancy.
This can quickly add up if you own several buy-to-let properties and plan on expanding your portfolio. While the prospect of having a respectful tenant who takes good care of your property and pays rent on time is the dream, it can make you wonder what you’re actually paying a letting agent for if they seem to only have to carry out very minimal work.
Another potential con for hiring a property manager is that they usually won’t shop around for the best quote for completing maintenance work but will rather work with the same contractor they’ve employed for years. While this could mean they get a good deal due to their relationship with a contractor, this isn’t necessarily the case, as some property investor horror stories show.
If you don’t do your research, you could find yourself working with an unprofessional letting agent who won’t feel bad about charging extortionate fees for basic checks and maintenance work or who don’t carry out proper checks for your would-be tenants or your buy-to-let property during while it’s rented out. That’s why it’s important that you do your homework and read reviews before signing any contracts.
Types of property management services
There are two main types of property management services: let only and fully managed. The first option only deals with your tenants until they’ve moved in. They’ll market your property, host viewings, check references, deal with drawing up contracts and moving tenants in. After that, your tenants are your responsibility. This is a good middle ground if you’d still like to try your hand at being a landlord but need a helping hand to get started.
In contrast, a fully managed service covers everything, from collecting and passing on rent to regular inspections, carrying out legal obligations like gas safety checks to managing maintenance work as needed. Here at Cox & Co, we offer a full property management service that can be highly customised to fit your exact needs. You can read more about letting your property with Cox & Co here.
The bottom line
At the end of the day, whether going it alone or working with a letting agent depends on your personality and what you want most out of your investment. If you’re a people person who wouldn’t mind learning more about property legislation and maybe even carrying out some basic maintenance work yourself, being a landlord could be the right option for you.
If, on the other hand, you’ve got a number of different commitments and value your time highly, opting for a fully managed letting service could be a better option for you. The same is true if you see renting out property merely as an investment and a way to generate passive income.
If you’re interested in learning more about property investment and building a buy-to-let property portfolio, have a look at our blog for more expert articles. You can read about investing in Edinburgh property here and some of the best areas to buy property in Glasgow here.
