It's interesting to note that a significant number of our franchisees are landlords who have built a property portfolio and who are now looking to scale their property interests.
It stands to reason that it's a very natural step for a landlord to transition to a lettings agent, because not only can they manage their own portfolio through their agency - thereby reducing management costs - , they can take on other landlords' properties as well, and develop another property-related income stream.
Here's 5 reasons why we think landlords make great property agents and why the proposition appeals to them:
1. Landlords are entrepreneurial
By their very nature, landlords are entrepreneurial and business-minded. Many of them understand risk and how important it is to "hedge" property risk by not relying on a single income stream - such as rental income from their own portfolio.
Landlords are always looking for additional income to help grow their own portfolio, and becoming an estate agent is a very natural and obvious step as landlords can use the profits from their estate agency business to invest in more property.
Like property, business also generates a monthly cash flow, as well as having a capital value at sale. This appeals to landlords who are seeking to create a capital lump sum to pay off their BTL interest-only mortgages, which they could achieve by re-selling their franchise. At Belvoir, we have confirmation of our first ever million pound sale, which gives a proven insight into what can be achieved.
Alternatively, many landlords invest in property as a legacy for their children, and again, a franchise business can be passed on to family members and children when the time comes.
See our video - Transitioning from landlord to lettings agent
2. Landlords know what landlords want
We've heard on numerous occasions of landlords who joined Belvoir as franchisees because they had a thorough understanding of what landlords want, and they felt they could offer a bespoke and high standard of service based on their own experience, but leveraging the Belvoir brand.
Landlords understand the issues that matter to fellow landlords, which can often only be gleaned from having "worked at the coal face" and experiencing the highs and lows of dealing with tenants and property management issues.
As an aside, it was particularly gratifying for us to hear from recent recruit, Yusuf Majid, of our Derby West franchise, who told us that he joined Belvoir as a franchisee because he had received such excellent service from us as a landlord himself!
3. Landlords know the local area from a property perspective
Typically, most landlords invest within a 10 mile radius of where they live, and, over time, they learn their area inside out.
They know the best streets to invest and they know the tenant demand for different property types. They have a team of trusted builders and handymen in place, and have all the other contacts needed to run a property portfolio.
They can leverage this domain expertise to benefit their agency and help other landlords grow their portfolios through in-depth local knowledge that has already been acquired.
Landlords also love to network with other landlords and it's likely that a new landlord franchisee already has a lot of contacts to approach about taking on new property instructions as soon as he opens his doors!
4. A husband and wife can work together
Landlords are often a husband and wife team, although one partner may be engaged in bringing up little ones and operates the landlord business from home around child care.
Many of our franchisees are husband and wife teams, one half of the couple starting the business, and then the other partner joining them in the business once free of child-care duties.
On occasion, married couples whose children have grown up, or who do not have children, also work as a team in a franchise as they simply wish to spend time together and also work towards the same business goals.
See our blog and video: Working as a husband and wife team in a franchise business
5. A lettings agency may be easier to finance than the next BTL property
Belvoir is very proud of our success rate, which is far above average! This means that banks are happy to finance a significant portion of the costs of buying a Belvoir franchise. You may be surprised to know that a franchisee may have to put in less than the typical 25% BTL deposit in order to buy a franchise. The bank provides the rest of the money through a specialist franchise loan.
"The bank would lend to a franchisee because they will be looking to invest in a proven concept that has been replicated in a number of other locations, thus reducing the risk of failure for the bank and the franchisee," says Mark Scott of NatWest. "This can make it easier to get a loan for a franchise as opposed to getting financing for an independent business."
This means that now, you are the bank's main concern. As Mark explains: "The only variable is the franchisee. Therefore we look closely at their experience and financial history." Just like a landlord applying for BTL finance, you will need a business plan and a clean credit rating.
With news that 2015 saw Belvoir announce our first franchise to break the £1million turnover barrier and our first £1million franchise re-sale, anyone from any walk of life thinking of buying a Belvoir franchise can have every confidence that the Belvoir proposition represents far less risk than starting a new business from scratch.
Belvoir is an award-winning estate and lettings agency with 160 successful offices around the U.K. If you would like to talk about being our next success story, please call us on 01476 570000 or email us on firstname.lastname@example.org
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