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Estate agent tactics! What would you do?


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Hello hubbers, 

Interested to hear what people my do in my situation. My thread requires tenant advice / estate agent advice so hopefully someone can help. 

Back Story
Last September I bought a 5 bedroom house in High Wycombe; a student town with shopping centre and good commuter links into Marleybone.
The property has historically been let to students room by room but was looking pretty run down, in a bit of disrepair and had a damp problem. But with a potential 6% yield on offer, and having completed a number of other refurbs, I decided to take on the challenge. I knew that once the work was complete I would still be completely out of sync from the cycles in which students look for housing and so I planned to let out to professionals on a short-term basis until i could get into those cycles. 

 

Having spent a fortune on the new stamp duty taxes, I decided to get very hands on and complete a lot of the work myself in order to save money. I completed the project including solving the damp problem for around £7k. The project took just shy of 3months and by New Year I had the house ready to let
 

I interviewed a number of estate agents in the area who claimed to be experienced in placing students and professionals into multi-lets. (In hindsight, selecting the agent with the lowest fees may be part of my problem but..) I agreed to work with one particular agent who assured me they would get my rooms let asap. Sure enough a couple weeks later they had found me the first tenant. 

The Problem

Weeks pass with very little activity. I call the agent regularly who assure me they are working on it. By the end of Feb my patience was growing thin. My mortgage costs were out-weighing the rental income 3x fold and I started to complain quite loudly to my agent. Within a week they found me another tenant. In fact they also found me 5 students who agreed to take on the house from July the 1st. Feeling assured my house was going to be fully let by July, I mentally accepted that March-June, the house would run at a loss and overall make a profit for the year


Regular communications with the agents happen over the next couple months asking about the students.

When can I meet them? Whats the process? Referencing and deposits?
The agents assure me they've done this hundreds of times and that their process is to take half of the deposit upfront to hold the property, reference them and then collect the rest of the deposit by the end of April. 
April comes. They've collected 4 of the deposits in total. They are waiting on 1 more which is late. 
End of May arrives and they drop a bombshell on me; ...The students are pulling out

Now supposedly the parents have been into the agency unhappy about the guarantor terms.
*Should any student damage the property, then they should all be held jointely liable*

 

But the estate agent tells me there's something else going on. The students seem to have fallen out with each other. It looks like they're looking for a way out and they're threatening legal action to claim back the deposit. The estate agent is refusing but thinks that the law could fall onside with the prospective tenants and their parents

A "Solution"?
The estate agent calls me into the office to look at our options. He feels terrible for what's happened and offers a rent-to-rent type solution.
He wants to offer me a rent guarantee for 12months if I agree to let the property to him at a reduced rate. We to and fro over what the rent should be and we settle on a figure £400 less than the maximum rent I would have achieved had the student let gona ahead.

But in order to take on the risk of not being able to let all of the rooms, he wants to keep the student's deposit

So here lies my issues. Is the agent being honest? 
Did they really try to fill my house with professionals the first time around or did they do the bare minimum to secure my business and then direct people prospective tenants into other properties?
Should the agent really be taking effectively a fee double what he should have taken for doing the job he should have done in the first place?
Is he entitled to keep the deposit?

If the agreement is between me and the agency as opposed to tenants, I'll loose control over who rents rooms in my freshly refurbished house? 

I'm tempted to tell the agent where to go. But the alternative agents in the area are not filling me with confidence they can get students in so late in the year

 

What would you do?
 

Feel free to add me on Linkedin;   https://uk.linkedin.com/in/dkidd

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I'd be tempted to not use the agent in future. A competent agent would know exactly where they stand with the deposit. 

I smell a rat with regard to the rent to rent option, they must be confident of letting the property otherwise wouldn't be offering this. If that is the case why haven't they already done this for you?

Students normally organise accommodation early in the year so you may have missed the boat for this academic year. Hopefully thats not the case and you get it filled asap.

Cheers 

Paul 

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Hmmm, I smell a rat aswell... he couldn't of felt that bad if he's offering you £400 less the rent that you would have got from the students?

 

its a difficult one because if you could afford it financially I'd not use the agent, but your probably in a situation where you may have left it to late and this could seem like the only solution, but I'd be very cautious in what I was signing up and agreeing to. 

 

Good luck...

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  • 3 months later...

I've never done this myself, so hands up, it's not something I know much about, but in truth this would make me nervous. Where would you stand if the agent had control of your property, had it full of tenants you knew nothing about and had no input or decision making power over in terms of their suitability and you stopped receiving payment from the agent to boot. Not an unheard of outcome in rent to rent.

 

As others have said, the agent is obviously pretty confident he can make a profit out of this or he wouldn't take it on.  How is he proposing to do this? Emergency accommodation for housing benefits tenants? Subletting to the council? It's an interesting question.

 

If you do decide to turn down his offer, you may have to accept you've missed the boat for this academic year.  Most university courses have started now, or 'as near as damn-it'.

 

It would be worth reviewing the letting approach to see if anything needs tweaking to help attract more tenants, you might want to ask an objective opinion on this. Do you feel confident the price reflects value for money in the area? It is often worth accepting a lower monthly rent to get tenants into the property.  A small reduction can make all the difference.  How are the photo's on the internet? Do they do the property justice, or would the property benefit from some better ones? Is there a large employer locally whose employee's you can target directly?  Just a few ideas, no doubt you've already considered all these.  

 

Best of luck with whatever you decide.  

 

 

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  • 1 year later...

Hi Carl

 

Thanks for taking interest in my thread. I’m glad you asked because I’m quite proud of how the situation turned out.

 

So what has happened since May 2017?

 

I decided to politely decline the agents offer. They could have been telling the truth but I found the whole situation very stressful and I put most of it down to how the agent was managing the situation and communicating with me. I felt this could be a reoccurring stress if I chose to work with them going forward. I demanded that I keep the deposit and I put my thinking cap on about how I could drive viewings to my house without an agent.

 

in a digital age where most people view Zoopla or Rightmove before even setting foot in an estate agents, did I really need a middle man to advertise?

And what other mediums/platforms could I leverage to get maximum exposure?

I decided on a two tier approach. Physical advertising and digital. 

 

I had seen floods of students walking to university in the morning like migrating birds. My first idea was to create posters and leaflets, and place these in places I knew students would be walking past; shops, windows, bars, I was willing to stand on the street and hand out leaflets if I had to! (As it turns out I didn’t need to go I this extent)

 

My second idea was to advertise on as many free digital platforms as I could find before then spending money on rightmove and zoopla to advertise. I created my own website, I called the university, I found an affiliated rental website, I found a website called Stu-Rents, I looked at spareroom, Gumtree, and Facebook but surprisingly, the platform I had the most success with was instagram

 

i had a photographer take professional photos which I had given to the estate agent to use (they didn’t btw). I reused these photos to create a slick website and social media page, and started to follow groups affiliated with Bucks University.

There were lots of them. BucksStudentUnion, BucksDanceGroup, BucksUNI etc. I made myself visible by commenting on recent posts and started to follow request the people who had like these posts knowing that they’re likely to be students who attend these groups and the uni

 

Before I knew it, Students we’re messaging me asking about the rent rates and if my house was available. As they messaged me, I checked out their social media pages as a sort of informal reference. I agreed to meet one group of students who were unhappy with their current landlord. As I was late in the year, I agreed a 10% discount on the rent if they could agree to all go under a single tenancy agreement, and a deal was struck... and that is how I filled the house.

 

12months on and it was time for my first lot of students to move out. I used the same strategy of adding people on Instagram who I thought were students only this time I did it in January. I had an array of people enquire. I arranged 3 viewings and secured 3 offers. I selected the best group and they moved in with no stress

 

apologies if that seems like a long reply but I do feel that I learned some very valuable lessons amongst my story. Most of all is to not give up or allow agents to take advantage.

As property investors, there’s an entrepreneurial spark in most of us. Part of being an entrepreneur is to find solutions to problems and to keep moving towards our goals. 

 

Earlier this year I refurbed my first commercial premisis and opened a hair and beauty salon for my wife. I’ve used the same social media strategy to drive traffic to our salon which is working beautifully

 

Hope this helps. Maybe even inspires 

 

For those interested in the Instagram page, the page is @5bedroomstudenthouse

 

Thanks for reading 

 

Feel free to add me on Linkedin;   https://uk.linkedin.com/in/dkidd

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  • 2 weeks later...
On 9/27/2018 at 6:43 AM, drkidd said:

Hi Carl

 

Thanks for taking interest in my thread. I’m glad you asked because I’m quite proud of how the situation turned out.

 

So what has happened since May 2017?

 

I decided to politely decline the agents offer. They could have been telling the truth but I found the whole situation very stressful and I put most of it down to how the agent was managing the situation and communicating with me. I felt this could be a reoccurring stress if I chose to work with them going forward. I demanded that I keep the deposit and I put my thinking cap on about how I could drive viewings to my house without an agent.

 

in a digital age where most people view Zoopla or Rightmove before even setting foot in an estate agents, did I really need a middle man to advertise?

And what other mediums/platforms could I leverage to get maximum exposure?

I decided on a two tier approach. Physical advertising and digital. 

 

I had seen floods of students walking to university in the morning like migrating birds. My first idea was to create posters and leaflets, and place these in places I knew students would be walking past; shops, windows, bars, I was willing to stand on the street and hand out leaflets if I had to! (As it turns out I didn’t need to go I this extent)

 

My second idea was to advertise on as many free digital platforms as I could find before then spending money on rightmove and zoopla to advertise. I created my own website, I called the university, I found an affiliated rental website, I found a website called Stu-Rents, I looked at spareroom, Gumtree, and Facebook but surprisingly, the platform I had the most success with was instagram

 

i had a photographer take professional photos which I had given to the estate agent to use (they didn’t btw). I reused these photos to create a slick website and social media page, and started to follow groups affiliated with Bucks University.

There were lots of them. BucksStudentUnion, BucksDanceGroup, BucksUNI etc. I made myself visible by commenting on recent posts and started to follow request the people who had like these posts knowing that they’re likely to be students who attend these groups and the uni

 

Before I knew it, Students we’re messaging me asking about the rent rates and if my house was available. As they messaged me, I checked out their social media pages as a sort of informal reference. I agreed to meet one group of students who were unhappy with their current landlord. As I was late in the year, I agreed a 10% discount on the rent if they could agree to all go under a single tenancy agreement, and a deal was struck... and that is how I filled the house.

 

12months on and it was time for my first lot of students to move out. I used the same strategy of adding people on Instagram who I thought were students only this time I did it in January. I had an array of people enquire. I arranged 3 viewings and secured 3 offers. I selected the best group and they moved in with no stress

 

apologies if that seems like a long reply but I do feel that I learned some very valuable lessons amongst my story. Most of all is to not give up or allow agents to take advantage.

As property investors, there’s an entrepreneurial spark in most of us. Part of being an entrepreneur is to find solutions to problems and to keep moving towards our goals. 

 

Earlier this year I refurbed my first commercial premisis and opened a hair and beauty salon for my wife. I’ve used the same social media strategy to drive traffic to our salon which is working beautifully

 

Hope this helps. Maybe even inspires 

 

For those interested in the Instagram page, the page is @5bedroomstudenthouse

 

Thanks for reading 

 

 

Thank you for sharing your success story! Very innovative and inspiring. I particularly liked how you used Instagram. It would not have occured to me at all. 

 

//Maria

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