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Letting agents, are you wasting time?

24 July 2019 902 Views
Letting agents, are you wasting time?

We all know that certain business functions are quicker to achieve and more cost-effective than others.

By considering the services you provide for one rental property over a 12-month period, how much time is spent delivering these services and the staff cost associated with each activity, you can work out your Return on Time Invested (ROTI).

This could include everything from initial rental valuation and pre-tenancy administration to ongoing monthly management and renewals or check-out.

The table template below is designed to allow you to input the name of a staff member responsible for each activity, their hourly rate, the time they spend on that activity and the cost of this time.

In instances where you outsource and there is a one-off fee, just input the name of the supplier in place of the staff member and the cost to you in the cost column, leaving hourly rate and time taken blank.

You could complete the table for several different scenarios, such as tenant-find only, let only and full management.

Service activity

Staff member responsibility (or supplier)

Hourly rate (£)

Time taken (hours)

Cost (£)

(hourly rate x time taken)

Rental valuation

 

 

 

 

Inventories

 

 

 

 

Certificates and registrations

 

 

 

 

Advertising and marketing

 

 

 

 

Tenant viewings

 

 

 

 

Tenant referencing

 

 

 

 

Tenancy agreement

 

 

 

 

Deposit registration

 

 

 

 

Rent collection

 

 

 

 

Rent arrears management

 

 

 

 

Property inspections

 

 

 

 

Contractor management and vetting

 

 

 

 

Out of hours calls

 

 

 

 

Maintenance and repairs

 

 

 

 

Tenant enquiries

 

 

 

 

Landlord enquiries

 

 

 

 

Deposit dispute handling/negotiations/returns

 

 

 

 

Serving notices (e.g. Section 21)

 

 

 

 

Renewals

 

 

 

 

End of tenancy and check out reports

 

 

 

 

Quarterly/annual NRL statement and HMRC reports

 

 

 

 

Other

 

 

 

 

TOTAL

 

 

 

£

 

Once you’ve completed the table for as many scenarios as you wish, calculate the average annual income of one rental property versus how much it costs you to deliver the services.

Example

Your total annual charges to a landlord per property [£XXX] minus the total cost of providing the various services in above table [figure from ‘TOTAL’ field] equals your gross profit per property [£X].

That excludes any other direct costs, such as property portal advertising and software licenses, and tax. However, it will show you the direct cost of your time in relation to providing your services.

Your results

Of course, not every minute of your time will result in a financial return and some activities are necessary and unavoidable, but by completing this task, you should be able to work out your Return on Time Invested (ROTI) and:

  • What activities within your lettings business are most-time-consuming
  • The tangible cost to your business per service you deliver
  • The annual cost of servicing a property
  • Where you can justify additional charges or look at streamlining processes

Improve your Return on Time Invested

You can significantly improve the financial return on your time by outsourcing time-consuming tenancy administration, property management and maintenance to a reputable provider like ARPM. 

If you’re ready to find out more, call the friendly team in Hertfordshire on 01923 775705.

Or if you want more help and advice, visit our Knowledge Hub and sign up to our newsletter here.

Contact ARPM

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