The idea of outsourcing strikes fear into the hearts of agency owners; handing over your portfolio to a management company can feel like you’ve lost control. But it needn’t be like that. After all – it’s simply a matter of delegation.
Rather than being a negative, the ability to outsource to a tenancy management company can free you to allow for further growth in your business. It does not alter your control over the decision-making process, and it doesn’t mean that you are giving up control of your portfolio. It simply means that you are allowing another party to take care of the day-to-day admin and accounts, while you look after the front-end stuff – the stuff you’re best at.
So let’s take a look at what it means to outsource – and help you to get to grips with how to do it the right way.
When you consider hiring a tenancy management company, the first thing you’ll want to ask is are they compliant? They should be ARLA licensed in order to guarantee money protection, and they should have all the qualifications required.
Check out what levels of qualifications they have, because trust us, this will become important when ROPA comes in – you need to be assured that they have all the necessary standard and experience to take on your workload.
Look at where they are based, and how the company is structured – some companies will have a call centre set-up, whereas others will be able to offer a more personal, one-on-one service.
By passing everything over to another company, you’re going to need to trust them with doing your client accounting. Provided they are ARLA accredited, they will be audited every year. This means that as well having money protection, you are better able to see what’s happening with your clients’ money.
Beware of outsourcing agencies asking to have access to your bank account in order to deal with payments – this should never happen. They should be using their own dedicated bank account, otherwise if the worst happens and money goes astray, you are not liable.
As mentioned briefly above, it’s worth thinking about whether or not the company uses a dedicated Property Manager – some will use a call centre, in which case your client will be unable to communicate with the same person each time.
In our experience, it’s much more efficient to have a company who can offer a dedicated point of contact – your landlords will feel reassured that they have someone who knows them and their needs, and becomes like an extension of your agency rather than a separate entity.
At the same time, remember that you should expect full transparency between you as the agent and the tenancy management company – it shouldn’t feel like you’ve just handed over the reins and never hear from them again – the two companies should be able to exist as a partnership, and in that, you should be able to see everything that they are providing on your behalf. This includes monies incoming and outgoing, rent arrears, maintenance reports, work orders and any contact between the landlord, the tenant, and the management company.
If you don’t have access to this information, then consider that a red flag, and ask why.
In addition to this, you should be able to see a full breakdown of all payments, fees and charges on a weekly basis. One of the main worries when hiring an outsourcing company is losing control over financial issues, so make sure form the get-go that this is set up on a dedicated system so that you can keep tabs on what exactly is coming in and going out, and the fees you are paying.
You should be provided with a full remittance statement regularly, which will show you exactly what’s happening with regards to payments etc.
The purpose of hiring an outsourcing company is to take away the worry from you, the agency, and as part of that, you should be getting a regular report, usually on a monthly basis (if you’re not, always ask!). This should show you a detailed log of what’s been happening with your property portfolio. Things like flagged arrears, Section 8’s, Section 21’s, maintenance updates, renewals, inspections…
Your report should be a ‘snapshot’ of your portfolio, along with details of any issues as they arise.
Of course, this shouldn’t take away your connection with your landlords entirely – in fact, having someone else deal with the everyday stuff means that you can work on nurturing your relationship, making all parties feel like the same team. To the landlord, it should feel seamless – they have a contact for the business side (the outsource agency), and they have a personal contact (you).
Your tenancy management company should feel like an extension of your agency – they should look like you, sound like you, and be working alongside you so that everyone who is in contact with the client know what’s going on at all times.
If a landlord calls you with a concern over something that the management company has been dealing with, it looks far more professional if you can say ‘yes, I am aware, and I’ll ensure that [Sarah/Tom/Helen] gets onto it.’ than ‘Gee, I don’t know about that, our management company did it, nowt to do with me!’
Part of that relationship is working together to protect your income. A good tenancy management company will be able to focus on managing money collection, and keeping on top of any late payments or anomalies in fees etc. This means that you have a guarantee of increased revenue, because you will be spending less time chasing money, and more time focusing on growth.
And because they are used to dealing with agencies (they’ll be dealing with several accounts every day), they have a good insight into what works, what doesn’t, and what’s changing in the industry. Therefore, if they see any ways you can adapt to increase your income, they can advise you on how best to go about it.
This also applies to changes in legislation. Your tenancy management company are in the best position to keep up to date on current changes and updates, and can let you know when things need to be done in order to remain compliant. It just takes that additional weight off your shoulders, as often, as agents, we can spend many hours researching and updating systems, sending out emails, and calling landlords to advise and update documentation.
This, of course means that you spend less time dealing with the admin that goes along with this, as well as the necessary training attributed to coping with these changes. Having someone on hand to do this for you saves you time, effort, and money.
In hiring a tenancy management company, once you’ve spend some time getting to know them and how they can work for you, you can work together to initially set up any systems which enable them to take over your portfolio. But this shouldn’t be time consuming – they are there to take away stress, not add to it!
Do your research. Find a company that best fits your needs. And enjoy that time you’re able to take back!
If this is something you’re interested in, or whether you’re just after some advice from an industry expert, arrange a free call with Kate to discuss this service further here.
We look forward to hearing from you!
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