How do Letting Agents make money working with Rent 2 Rent companies? #R2Rshortandsweet #24

How can letting agents earn with R2R?
We share with you how you can highlight the benefits a letting agent will receive if they work with you

Rent to Rent - How do Letting Agents make money working with Rent 2 Rent companies? #R2Rshortandsweet #24

Hello! I’m here with another Rent to Rent Short and Sweet video and blog – where we come to you with lots of information and only a little bit of time.

Today we are looking at a question from Mark…

“Hi Stephanie. I'm a little bit perplexed and I wonder if you could shed some light following a chat with an independent agent.

He asked me to send them a letter regarding the benefits for them of the R2R relationships and said why would they give up their 20% management costs and turn that clients over to him.

In this type of relationship, how do the agents also make money? Best wishes, Mark.”

This is a great question and one that you can come up against often when talking to agents and I know a lot of people worry about how to talk to them too!

How do the agents make money?

There are two main services that most letting agents provide:

Tenant Find Only
The letting agents will find tenants for the landlord and charge the landlord a one-off fee and the landlord will manage the tenants in the property. It’s a letting agents less desirable service as they would prefer recurring income.
Full Management
This service is where the letting agent will manage the property and collect the rent from tenants. They can charge the landlord a fee which is usually 10% of the rent every month plus VAT - but it could be higher or lower.
This is the letting agents preferred service as it’s recurring income every single month. And the letting agent’s profitability will very much depend on how many landlords the letting agent has under full management.

That’s the basics of how letting agents make money. So, when you approach a letting agent and ask, "Would you like to work with me as a rent to rent person?", the agent thinks that you are going to take that business, that you are going to go directly to the landlord and cut them out and this is what they want to avoid because they want that recurring income.

How do letting agents benefit from working with Rent to Rent?

The key factor is that you will pay the letting agents the rent and they still get to keep their 10% fee – even though they do not have to do anything and you will now be managing the property, and the rest goes to the landlord.

From a letting agent’s perspective, that is amazing.

Another thing that the letting agents are looking for is minimal risk - they don’t want the risk of you going direct to their landlords – so it's about building on your relationship so you can highlight what you're offering.

You need to package up the following highlights and deliver them in a way that agents can understand:

Offering guaranteed rent
Agents continue to receive their fees
The property is being managed

That's everything the letting agents want as well as the minimal risk in the transaction as at the moment they don't know you so that makes dealing with you a risky business for them.

I hope that was useful and please get in touch if you have any follow up questions – I’ll be happy to help.

All the best for now,

Stephanie & Nicky

xx

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