How does a guaranteed rental system work?
It can be a tricky business, this landlording malarkey. Whatever your current circumstances, there are bound to be hurdles along the way when it comes to letting your property - particularly for those new to buy-to-let.
Tenanting isn't always easy either. The financial circumstances of your tenants can change, their jobs can mean they need to relocate; people renting properties have more flexibility to bounce around, and so you might find you're in a position where you have to find new tenants every six months or less. That's not ideal when you're busy in other aspects of your life, and especially problematic for landlords who rely on receiving rent for 365 days of the year as their primary income.
Whether it's a recent addition to a vast portfolio or your very first buy-to-let, there are options available through quality letting agents which can give your property the strength to leap over any hurdles which present themselves. They're called guaranteed rent services.
The clue might be in the name as to what they offer landlords. But how exactly do they work, and how could you benefit from a guaranteed rent service right away?
Guaranteed rent 52 weeks a year
As we said, the clue is in the name. The most sought after benefit of this premium management service is that rent is guaranteed, 52 weeks of the year. If that sounds too good to be true, fret not; it's true, and it's available to landlords right now.
Guaranteed rent services position a quality letting agent as your tenant instead of the people who actually reside in the property. What this means is that it's your letting agent who pays you rent, not a tenant who could potentially give you some problems, and that rent is guaranteed to be paid to you regardless of whether the actual tenant has paid the rent or not. In fact, you'll start receiving rent immediately from the start date on your contract - you won't even have to wait for the tenant to move in - and there is no monthly management commission or set up fees for this service.
Even when the property is empty - a time when you'd normally find yourself out of pocket - you'll still receive rent. This is invaluable to landlords and is exactly why guaranteed rent services are something anyone letting a property should consider.
None of the usual hassle
Empty properties are a landlord's worst nightmare. If you're not working with a quality letting agent who provides a guaranteed rent service, not only will you not receive rent, but you've now got the hassle of having to find new tenants.
With guaranteed rent services, your letting agent will do this for you using in-house tenant referencing. As the letting agent is now responsible for collecting the rent from the tenant, you can rest assured that only the best calibre creditworthy tenants will be placed in your property.
Along with this peace of mind comes protection from any legal costs which may arise; gas and electrical maintenance, fire and safety regulations, energy performance certificates - all of this must be taken care of before a new tenant moves in. Damage costs are covered too, for an amount equal to six weeks rent.
How is it calculated?
You might think that such a service would result in you receiving just a fraction of the rent you could receive if you decided to go it alone, but this is far from true when you use a quality letting agent (there are certainly horror storiesout there of when similar guarantees were made by lesser letting agents).
Your monthly rental payments should be based on the market rent of the property you're letting. This involves your letting agent undertaking plenty of market research and getting out and about in the area to achieve a satisfactory rent based on the findings.
If there is a catch, it's one that any thinking landlord should expect. The monthly rent you'll receive is slightly less than the market rent (for obvious reasons), and is comparable to the same amount you'd receive when using a traditional management service at any old letting agent. But instead of traditional service - you get all of the aforementioned benefits. A slightly lower monthly rent is a small price to pay for a steadfast guarantee of rent 52 weeks a year, peace of mind, and the freedom to focus your attention on the things important to you.
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