In the third of our series on serviced accommodation, Rob and Paul talk about letting agents and more specifically at the kind of letting agent that is needed when it comes to managing a serviced flat. Of course, when it comes to the serviced model, it is important that your letting agent has experience working with that model, as it requires a very specific set of skills.
Rob: Hi, it's Rob from Property Investments UK and in today's video we're going to be looking at what systems a good letting agent should have in place to successfully manage a serviced flat.
Serviced flats can be very profitable for investors but there are some key things to consider when it comes to the management of that kind of property and it's important to choose the right letting agent.
Residential Estates have got that very well wrapped up and rounded in terms of the services they offer so Paul Winder, again, is probably the best person to give you an insight into what exactly managing a serviced flat involves.
So, Paul, what systems do you have in place to try and make sure a serviced flat runs smoothly, that it's looked after and that, ultimately, it is rented by the right kind of people?
Paul: I think one of the key things is that we already had a lettings system in place before we incorporated serviced flats into our business model.
Rob: Because you were already running the lettings model beforehand?
Paul: Yes, and we had some things working using the serviced model as well. Things we could offer people.
So, we had already built a few relationships with clients. We knew how it all worked in terms of hiring cleaners and reporting to our investors on their properties.
It was really just a case of having all that in place and then finding the correct developments in which to implement it all.
I think the key is being in the letting agent, you know, we're not trying to create something to add to something to give it extra value.
It's actually the other way around for us. We want to find the stock to be able to put our model on. Properties that will work are sometimes very difficult to find but, at the end of the day, the stock has to fit our specifications for it to be profitable within our model.
But I think the clue's in that. What we have is, we have got all the systems in place, you know, we'll do weekly cleans on your apartment, et cetera, we've got that in place. The reports, and we've got that in place. The meet and greet for our clients, et cetera. The relationships, we've got them. So we're not trying to, we're not trying to, I guess, suck eggs with it. Okay.
Rob: Yeah, so from an investments point of view, a landlords point of view, they're not having to get involved in all that.
Paul: No, no. It's fully hands off.
Rob: You guys can fully do that. You're coming from it from a different angle, it's not like a developer that's trying to say, "Right, got some flats here let's try and do something with it."
Paul: And look for a different spin on it.
Rob: And don't have the systems, the processes in place. You already have the cleaning contracts.
You already have the local agents that do the meet and greets, welcome the clients and stuff into the property, show them the-
Paul: And we've already ironed out all the pitfalls we have so when we move to a new area like we are doing now with Luton, we already have all the questions we need to ask, in place.
We know what mistakes have happened in the past.
We know what we need to iron out for everything, so when we go in we can go in with very specific dynamics.
Say, "Right, this is what we need, can you supply this? This is the cost we're paying there, this is the cost we want here."
We've got everything, so the transition is seamless.
You know, and the last thing we want and why people generally want to go down the serviced route is people have got their own lives haven't they?
And we say, "Right okay, if you're willing to do this for us, obviously you will reap the rewards, that's the idea of it, but we will look after every single purpose of it for you. You'll have no contact to any bills to be paid, you name it, we will literally look after the whole shebang for you."
Rob: It's a hands-off kind of nature and stuff.
Paul: Yeah, absolutely.
Rob: And is it scalable for you guys? Well obviously in terms of looking at other areas so you don't have to just be in Manchester, you couldn't be, as long as the location is right, you can be in other areas around the UK.
Paul: Yeah, there are certain aspects, it's got to have a good business hub et cetera, headquarters for business, it's got to fit the corporate client we're looking for.
It's relatively open, there's a few areas where we won't go into because it's been running a little time, London has had this serviced accommodation route for quite a long time.
We don't necessarily deal in London anyway.
We're limited to what we want to do because there is no point in over-saturating ourselves.
Or over-saturated for our clients. When we do all our research and what we want to do for a serviced model, we obviously go to our suppliers of our clients and say, "Will this fit here?"
If they say yes then we will then go and look for a development that suits in terms of location specification.
Rob: And those systems are able to work within those areas from your central hub I guess?
Paul: Absolutely, yes. So obviously cleaners will be subcontracted et cetera.
We will be hands-on when we are appointing these and making sure we can do it.
Because we do reports every week, on the cleaning every week, we are also on hand, to experience if you've got any issues straight away. If we're not happy then we will change it.
Whereas I suppose on a normal AST, that you've got a manager in place that, they don't go around. You might not know something is going wrong until six months down the line.
Rob: Yes there's a lot more involved in it, I guess than a normal tenancy isn't there? Because a landlord, you might buy a property, give it to a letting agent and then that's it. It's looked after, they go round once every three months or six months, but apart from that, you don't tend to hear too much from it.
Rob: I guess, you don't necessarily need to as a landlord or investor on the serviced model, as long as you've got the right agent to run those elements within the business.
Paul: Yeah, yeah. But you'll have a more specific management because, like I say, even if you don't hear from a normal letting agent, three to six months, in three months a lot of bad things could have been happening in your apartment.
Rob: Yeah, yeah, that you're not aware of.
Paul: Yeah. Wear and tear. I mean it could be whatever, but with us, we want to make sure that everything is in place.
Because it works very well for us. I think we'll go into it a little bit later but our business is your business. That's how it works, we go into partnership with you.
In that we're committed and motivated to make this work, and the better it works for everyone, is the easier it is for everyone as well.
Rob: So it's a long term prospect.
Paul: Yeah, yeah. Absolutely.
Rob: Yeah. Perfect. So there are obviously systems in place that allow that kind of serviced accommodation thing to run, but that's why it's important to use letting agents and stuff. But also, not just, I suppose a traditional letting agent, a letting agent that's got experienced with the serviced, specifically the serviced model.
Paul: In the serviced model especially, yeah.
Rob: Not only to have to find those right type of tenants and companies that are going to want to rent that type of project or property but also making sure that the back-end systems are in place.
Paul: And it's being fully transparent, at any point one of our clients can say, one of our investors can say, "Right, who is in my apartment?" et cetera. "Can have a report on it, kind of see the update et cetera?"
That's it, we have, even though we deal with a multitude of businesses, if you like, we have a very specific set office for the serviced accommodation side, so we're always on hand, you know, it's 24 hours, is it is a 24/7 service.
You know, a lot of the meet and greets we do, people will fly in and land at eleven o'clock.
Rob: Specifically within your letting agent you have a team that just deals with serviced? Yeah.
Paul: Just deals with serviced, yeah.
Rob: Yeah, good structure. So there are other videos that we're going to talk about in a minute, which will look at how to run a serviced flat, what sort of benefits and stuff they are.
Hopefully, that just gives you a bit of a context to what things to have in place and why it's important to have the right kind of letting agent as well.