Starting up property lettings business - Portal access

[Tom_dante]

Hi All,

So I'm looking to start up a small boutique home based letting agency.

I don't plan on growing it exceptionally large and taking on staff. I will probably look to max out around 30 properties under full management.

Anyways the biggest cost seems to be getting the listings onto rightmove and zoopla.

As a small time agent, I don't ever see myself needing a continuous subscription as I am not looking to keep growing. Also to offer value and differentiate from the high street agents I can't really afford to take on that additional cost.

So that got me thinking. As a landlord myself I have used openrent to list properties at £29 a pop, which gets them onto rightmove and zoopla.

What is to stop me using the same service but do so on behalf of clients?
Do they need to know that I am listing via openrent?
Would openrent have a problem with me using their service to list properties that do not belong to me?

 

[WaveJumper]

My question would be on top of the business bank account, accountant and I assume adequate insurance cover etc etc if advertising costs are a hurdle is it a viable business

 

[intheTRADE]

It is against Openrents policies for letting agencies to use their service. It's only for private landlords.

You could 'risk' it however, but would run the risk of having all your listings removed at any point without warning

 

[Tom_dante]

Ohhh I see. Thats a bit of a spanner in the works then! That is the greatest barrier to entry into the business and I can see why rightmove et al don't want small timers coming into the business as the big agencies would then no longer be willing to stump up the extortionate monthly fees!

Thing is there are quite a few of these type of listing services for private landlords. I could just alternate between them to stay under the radar.

 

[intheTRADE]

Have you had a look at PropertyHeads and OneDome? these could be good alternatives depending on your location

 

[Tom_dante]

Ok, so I've just gone into openrents terms and conditions and there they state:

OpenRent’s advertising is designed for private landlords, and should not be used for sub-letting or by third parties such as letting agents. By advertising on OpenRent, you are declaring that you are the landlord of the property you are advertising, or have the explicit permission of the landlord of the property to place the advert.

This is a bit confusing. On the one hand they are saying letting agents cannot use their service. On the other they say if toy have explicit permission from the landlord then you can use their service.

If I declare myself operating as anything other than a letting agent and get explicit permission from the landlord, then they would be OK with using their service?

 

[Tom_dante]

Thanks. I'll be operating in London suburbs. Will take a look at these.

 

[ethical PR]

It's not confusing @ Tom Dante letting agents cannot use the service.

If you have developed a business model where you can't afford to advertise on key channels customers look for rentals on you need to go back to the drawing board

 

[Financial-Modeller]

@Tom_dante You appear to be taking a business mode that is highly scalable and starting out with the unique goal of not growing! Why?

What will your USP be?

How will you persuade landlords to hand you the keys when you are specifically not using the portals that everyone else use to market to tenants?

Given that you think your business won't withstand portal costs, and tenants cannot be charged fees upfront, will 30 tenacies viably support increased compliance costs etc?

 

[Tom_dante]

Thank you both for your replies.

With 30 properties my business would still be viable despite paying £15,000 per year for portal access. Just not as profitable as I envisioned.

However I'd rather not have that expense if it can be avoided. As I am only looking to manage 30 or so properties, it would be a lifestyle business, something I enjoy doing. It would afford me the time to work on other investment projects, whilst providing a semi-passive income.

With only 30 under management I can easily self manage this without additional staff and give landlords a very personal service. Cost are kept low, both parties benefit from this.

I know of other property sourcing/investor type people that in addition to sourcing properties for investors, then also offer a fully managed solution to the investor for the property that they helped source. They too are using the portals which technically "agents" are not allowed to use. Im assuming as they are not doing volume business the likes of openrent probably arent too bothered by them using their service, or they havent noticed it.

The USP would be the fact that I'm not managing hundreds of properties. It's a personal service, managing only a capped amount of local properties.

If I make it clear to the landlord that this is what I'm offering, I could provide all information, photographs etc and let them do the listing under a "consultant" type service? Then I manage the viewings and the general management of the property. Its a win-win for both. Lower fees for the landlord, quick responsive management for the tenants, lower cost for me and that allows me to keep my properties under management to a manageable size.

It seems the industry is setup to not let small agents to enter the market, but on the other hand they are happy for landlords to enter as long as they are managing for themselves. Surely it just a matter of time until the gap in the middle gets filled.

 

[AllUpHere]

You've actually stumbled upon quite a good idea. There's absolutely no need to pay Rightmove (et al) for their services. You do, however, need to design your business around the fact. I've helped clients set this up in the past. Do you mind me asking where you are (specifically) as there may be a conflict of interest with my existing clients? Feel free to send a private message if you don't want to give your location on the open forum.

 

[tony84]

Have you maybe thought about rather than seeing yourself as a small letting agent trying to undercut everyone you could be a small letting agent offering 5* service and charging more?

If you plan on topping out at 30 properties, that gives you more time to look after landlords and tenants.

Maybe offer your landlords an insurance policy as part of your cut? You can probably take out a rental guarantee insurance policy - see if you can one white labelled from someone like let alliance or rent guard? You pay for it out of your cut. See where you can add value and charge for it.

Just a thought.

 

[gpietersz]

What is to stop me using the same service but do so on behalf of clients?

Probably Rightmove and Zoopla's terms of service. They want letting agents to pay their fees to list on their platforms, so they are not going to let them use Openrent or similar to avoid that.

A landlord with a similar number of properties you are planning on managing told me he mostly fills them from recommendations. No advertising costs and he gets better tenants.

 

[Darren_Ssc]

Easy enough to have your own site, especially if all properties are going to be in a specific area. You don't need to be top of search results either, people will look beyond the main sites. Believe it or not , not everyone likes dealing with regular estate agents.

 

[AllUpHere]

We gave up using a letting agent when they told us we couldn't 'vet' potential tenants, and couldn't discriminate against those who were unemployed or on benefits. The market is crying out for some sort of letting 'consultant', who will do a decent job of finding good tenants and keeping them.

 

[Financial-Modeller]

...I can easily self manage this without additional staff and give landlords a very personal service...

You could be busy; but will that sufficiently placate them for the lack of tenants?

 

[tony84]

We gave up using a letting agent when they told us we couldn't 'vet' potential tenants, and couldn't discriminate against those who were unemployed or on benefits.

In fairness to the agents, I am pretty sure that is a law rather than the agents choice.

 

[AllUpHere]

In fairness to the agents, I am pretty sure that is a law rather than the agents choice.

I'm sure you are right, but an agent who could bend the rules slightly to get the best tenants would have quite an advantage.

 

[tony84]

I agree. I think you should be able to choose who lives in a property you own.
Having been a landlord, we had a tenant (employed for a solicitors with 2 young kids) who converted the cellar to a cannabis farm and knocked bricks out of an external wall to allow for ventilation.

You can get bad tenants employed or unemployed but I think you shoudl be able to be as fussy as you like as the risk is potentially thousands and thousands if it goes wrong and can be life changing.

 

[agentx]

Hi All,

So I'm looking to start up a small boutique home based letting agency.

Not a great Idea in itself, landlords tend to stay put or self manage. At best you can expect to acquire new landlords only. Most of these will often be fee driven. Over many years in this industry I have yet to see a landlord that wants “boutique”, whatever you feel this might mean.

I don't plan on growing it exceptionally large and taking on staff. I will probably look to max out around 30 properties under full management.

If you have 100 or you have 30, the headaches and requirements on you will be similar. As an example you will need to be able to cover 24/7 emergency calls, and be there to assist with out of hours issues. As a small concern you will have to provide this support yourself, there will be no employing outsiders or having a work colleague to share the undoubted burdens this industry can throw at you. Many new entrants get out when they realise scaling will take years (if ever) and they are providing a round the clock service for not enough reward.

Anyways the biggest cost seems to be getting the listings onto rightmove and zoopla.

They are expensive to all agents although you should be able to get zoopla for around £300 pm. rightmove lucky to pay less than £1k pm. “On the market”. could be a good alternative. they are the cheapest of the well known lead generating portals that I have used.

As a small time agent, I don't ever see myself needing a continuous subscription as I am not looking to keep growing. Also to offer value and differentiate from the high street agents I can't really afford to take on that additional cost.

No client will sign up with an invisible agent. In spite of all the new buzz words bandied about, agents do everything that a landlord requires, in one place.

There is no re-writing of this system, nothing new to bring to the table. Agents regularly discuss and implement innovations and improvements to services to better our offering - anything worthwhile has stuck, everything else has been binned off.

So that got me thinking. As a landlord myself I have used openrent to list properties at £29 a pop, which gets them onto rightmove and zoopla.

What is to stop me using the same service but do so on behalf of clients?
Do they need to know that I am listing via openrent?
Would openrent have a problem with me using their service to list properties that do not belong to me?

The simple answer is you will have to pay a portal to advertise. Aside from rule breaking no landlord will take seriously the agent that uses (or attempts to use) a third party, or who expects them to go to the trouble to register and deal with open rent or another.
The portals (mostly Rightmove) are not the friends of agents. They are a necessary evil.

In summary you can run a small bespoke management agency,

BUT
- you will have to pay a portal
- you will have to be available at all hours
- you will find it lonely and tough when a renter who isn’t paying and is abusive, and his/her landlord is angry and won’t pay for repairs as a result……

and you will have to fund it - whilst it grows at a snails pace -to where you want it to be.

 

[AllUpHere]

The simple answer is you will have to pay a portal to advertise. Aside from rule breaking no landlord will take seriously the agent that uses (or attempts to use) a third party, or who expects them to go to the trouble to register and deal with open rent or another.
The portals (mostly Rightmove) are not the friends of agents. They are a necessary evil.

In summary you can run a small bespoke management agency,

BUT
- you will have to pay a portal
- you will have to be available at all hours
- you will find it lonely and tough when a renter who isn’t paying and is abusive, and his/her landlord is angry and won’t pay for repairs as a result……

and you will have to fund it - whilst it grows at a snails pace -to where you want it to be.

If any of that is the case, you are doing it wrong.

 

[agentx]

I’m not doing anything wrong. I’m just passing on years of experience of working in, starting up, selling, buying and now operating a highly profitable agency. Perhaps you want to be more specific?

 

[AllUpHere]

I’m not doing anything wrong. I’m just passing on years of experience of working in, starting up, selling, buying and now operating a highly profitable agency. Perhaps you want to be more specific?

I spoke to the OP on the phone about this and gave him a few pointers. I've had clients who want to operate in a very similar way to the OP.

Being completely honest, if you want advice on how to run a letting agency in this way, the last person I would ask is a letting agent. At the very bottom of the list would be one who tells us that it has to grow 'at a snails pace' and that the portals are essential.

The op wants to do things a little differently, which is almost always a good thing.

 

[Mark T Jones]

I'm sure you are right, but an agent who could bend the rules slightly to get the best tenants would have quite an advantage.

Unfortunately they won't be around for long. At least not if they make it at all obvious.

the subtext here is one of building rapport and actually listening to the landlord - which most run of the mill agents are pretty bad at.

I'd agree with the earlier suggestion that the real money niche here is in being more like a US realtor and charging for the service rather than racing to the bottom on price.

 

[agentx]

In an ideal world yes Mark. But I have met thousands of landlords and they are generally all reluctant to have their investment returns affected by what they perceive to be unnecessary charges or costs. The British market will never accept USA style realtor high fee agency. It’s failed multiple times.

Alluphere, with respect you clearly have prejudices against this industry. I said that anyone starting in letting will grow at a snails pace. The market is tied up, the barriers to entry are growing (high portal costs, limited income source and excessive regulation, and landlords don’t jump ship).

It’s not always a good thing to do things differently particularly in such a highly regulated industry, where we are literally told how must operate. Don’t believe me? check out the TPO website and read through the code of practise. Failure to adhere to the code = fines etc.

If you are ill do you go to a Doctor? Or is it just letting agents you hold a prejudice towards?