Marketing your rental property - how to save a huge amount of money AND probably find good tenants

Using an agent to market your property - the pros

1) If you don't live locally to your rental property it is almost essential to use an agent, to avoid hours spent travelling to show the property to prospective tenant - a good reason for investing locally!

2) Agents take most of the hard work out of the letting process.

3) Dodgy tenants are less likely to go via an agent mainly because of their stringent referencing procedures.

4) These days there is a lot of 'red tape' involved in letting a property and they can usually organise all this for you.

Using an agent to market your property - the cons

1) They are VERY expensive!

Agents' fees for 'Let Only' range between 7% and 10% plus VAT. But forget about percentages, let's take a look at a typical let of £900.00 pcm - that's £10800.00 per year. Assuming a fee of say 8.5% plus VAT, you will have to pay the agent £1101.60, usually up front once the tenant is found - which more than wipes out the first month's rent!

And remember, the above is for Let Only - not 'Full Management' - you will still have to manage and deal with the tenants yourself.

On top of all this, agents often slip in other 'expenses' such as charging both the tenant and you for the Assured Shorthold Tenancy Agreement. They will also usually charge up to £40.00 just to register the deposit with the Tenancy Deposit Scheme. Finally, if the tenant remains in the property after the first year they will usually charge you AGAIN (often a reduced percentage), even though virtually no work is involved!

2) You often have little control over the CHOICE of tenants.

3) The Great 'Full Management' Deception.
Many novice landlords opt for the Full Management solution, whereby the agent not only finds the tenants, they 'collect the rent', deal with tenants' problems and check the tenants in and out. This can easily cost up to 15%. As for 'collecting the rent', all this means is you receive the money AFTER it has passed through the agent's account - in other words you get it late! If the tenant fails to pay, the agent will write to them but ultimately it'll be YOU who has to deal with the problem.

Incidentally, if you do go for the 'full management' option, always ensure that the agent is a member of ARLA.

TOTAL COST (FOR LET ONLY) - ABOUT £1190.00 (including charge for AST)
TOTAL COST (FOR FULL MANAGEMENT) - ABOUT £2034.00 (including charge for AST)

How to let it yourself - properly

1) Chat to local agents and check the internet to establish a REALITIC asking rent.

2) Make sure the property is very presentable and take decent photos.

3) Use a service (such as Discount Letting) that allows you to post your ad on major internet property portals such as Primelocation, Rightmove etc, with equal status alongside agents' properties.

4) Once you've found what you believe to be satisfactory tenants, obtain proper ID and reference them properly.

5) Take out Landlord Rent Guarantee and Legal Expenses Insurance.

The cost should be about £15.00 per tenant to reference them (depending upon their employment status), plus £99.64 for our Rent Guarantee Insurance and about £60.00 to advertise on the main property portals, plus about £12.00 for an AST.

TOTAL COST - ABOUT £!87.00 - a saving of over £1000.00 on just the Let Only agent cost!

The point here is that by advertising on the premium portals, such as Rightmove, by referencing the tenants FULLY and by using Landlord Rent Guarantee and Legal Protection Insurance, you will probably be just as likely to find a good tenant as if you used an agent. I would however always advise against too much cost-cutting when marketing and letting your property as it can prove a false economy.

There are some useful FAQs on Landlord Rent Guarantee policies here.