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.