A property company owns over 140 rental units and has analysed its costs, and shared them with Landlord Today.
The units owned by the Open Property Group are spread across England and Wales, and the exercise was undertaken to establish what percentage of the gross rent was gross profit, once you allowed for typical running expenses but excluding financing costs.
OPG says: “The findings act as a stark reminder to landlords that the management aspects of a rental portfolio alone can make up a large chunk of the monthly rental income, eating into profits, and all on top of additional finance and miscellaneous costs.”
Repairs were revealed as the biggest outlay in November, equating to 11 per cent of the total rental income, whilst the cost of full-time property managers employed by OPG came in a close second at 10 per cent.
General maintenance amounted to 7.7 per cent and other ancillary costs such as gas safety, electrical safety and energy performance certificates totalled 5.6 per cent.
This means that the net rent received is 68.5 per cent of the gross rent, although not accounting for any mortgage, insurance, licensing and other miscellaneous costs.
OPG managing director Jason Harris-Cohen says: “The analysis of our portfolio highlights that there are many costs involved in owning and managing a rental portfolio, over and above the obvious expenses like finance costs if the portfolio was not purchased with cash.
“Even if a landlord doesn’t outsource the management, there is still a value they need to put on their time, and these are the kinds of costs they should be scrutinizing when evaluating the health of property portfolios.
“With falling property prices, increased management costs and higher borrowing rates, landlords need to ensure they are conducting a thorough review of their rental portfolio profits to understand which properties are still a viable investment.
“Property remains a solid investment over the long-term, but in the current market and with the ever-changing pressures on regulation, it could make sense to invest in other types of rental properties.”
OPG describes itself as a professional cash buyer and portfolio landlord, which guarantees to buy any type of rental property or portfolio, regardless of condition or whether vacant or tenanted. “This provides landlords with an alternative option to consider if they find that their portfolio is underperforming” it says.
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Cost of maintenance men to come out is like buying Gold dust nowadays. Time landlords get do-it-yourself classes, as these men are now taking the mic, with quotes of 800 pounds to change a mixer.
You what? £800? Where?
It's not just the cost tradesmen, it's if you can even find them, as they have been retiring over the last 30 yrs there haven't been replacements trained up, I carry out most of my own repairs and enjoy doing so, for landlords unable, or unwilling to get their hands dirty it must be a nightmare , today I'm off to replace and redirect some guttering downpipe, not rocket science but you try and find someone to do it, and then look at what they want to charge
I am a completely hands off landlord. With no DIY skills, everything is handled by the letting agents. I may have been lucky, but I don't seem to have had large bills. The latest was a repair to a washing machine for £84 including a call out.
Agree it's very difficult to find anyone willing to do any jobs. We have always done jobs ourselves if we can, but getting too old for it now. It would help if tenants were a bit more understanding, but as they never have the problem of trying to find a tradesman, they don't appreciate the problem. Another reason to sell up unfortunately.
I will turn 70 next August , at the moment I'm fit and able to carry out most repairs myself, but I'm fully aware that at some point in the future I may not be able to do so
My father carried on with a hands on approach until he was 89; he was about to exchange contracts on a huge renovation project when he died.
89 Ellie, I've got a bit of time yet then, I had a carpenter well into his 80s still doing things for me, I also learned a lot from him, RIP John
If you love what you do, it's not work, it's a way of life.
You can carry on for ages if you want to Andrew. Yes, John, that is absolutely true - my father loved exciting new projects. However, this Government is not exactly encouraging us to invest and improve areas- quite the opposite, in fact.
The biggest cost is and has always been the mortgage interest payments, for the majority of landlords who have mortgages. So to write an article about rental profits which doesn't include mortgage interest costs seems bizarre.
There was nothing new or enlightening in the article - just an advert for OPG to buy your portfolio - they probably paid for the "story"
Read the article and thought the exact same that Neil has written above, I also agree with sad Landlord, for most of us it is the mortgage rate that is the biggest expense.
I’m so glad we have these endless surveys otherwise I’d have no idea
🤦♀️
I agree, the article is waste of my time to read it.
I do all my own repairs as most so called tradesmen are pretty useless. If you pay for tradesmen and agents, it just can’t be worth it.
I run a gas and plumbing company. We do good quality work and respond quickly when needed. We also have an office so calls are answered.
I'm rather unimpressed to be described as pretty useless!
The problem with tradesmen, some are good and some are bad. How do you find the good ones? I discovered a great plumber by chance during an emergency. Not the cheapest, but very good quality work and responds quickly in an emergency. I then required additional tradesmen, electrician, plasterer, floorer etc. The plumber had all the contacts and arranged all the work with the other tradesmen, becoming the site foreman.
Once you find good tradesmen, you need to keep a note of them.
@Matthew Bowns - why don't you put your company name and email address / phone number in your profile, so that we can contact you? What areas do you cover?
Agreed John, I've got an excellent electrician that I've been using for over 10 yrs now, if I were to call him with an emergency on Christmas day he would come out, the plumber I used to use retired so I used his son, nice guy but totally unreliable, I've now found a good one who oddly enough is the son of a plumber I used 30 yrs ago, I've got a good roofer, grandson of a guy I knew 45 yrs ago, plasterers are a nightmare, the last plastering job I done myself because no one wanted to know. I always pay in full on receipt of invoice, normally same day, so yes good reliable tradesmen are like hens teeth so when you do find a good one look after them
My plumber is trying to retire, slowing down, no longer VAT registered, but hates to let his customers down!
Andrew sounds like you have a great team well done.
Difficult and expensive in London but not surprising with so many Regulations, can be £15.00 pd Congestion Charge, can be also £12.50 ULEZ plus £6.00 ph for parking for diesel vehicles which most builders vans are, limited hours and have to move try do a job under those conditions that the hopeless money grabbing Mayor we have. Then the traffic to get from one job to the next thanks to Mayor traffic creating Schemes, blocking off Roads and making duel carriage cycle Lanes out of others, can you imagine the trades man coming on a bike stupid nonsense. So they have to Charge to make a wage and don’t have £20 / £30k in their back pocket for an Electric one.
Many Plasters that I came across in my time were mostly Alcoholics if I am allowed to say that, it must be something in the stuff.
London sounds like a nightmare, not for me
Up early this morning Andrew?
Was it an Irish or Avocado for breakfast?
I have a rule Robert, no whisky before 8.00 pm and I don't like avocado, more of a bacon & egg man.
I'm with you on both Andrew.
I'm partial to a full English, only beaten by a full Scottish which also has black pudding and potato scones.
I don't tend to drink spirits but am happy to have the occasional pint at lunchtime if not working in the afternoon.
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