How To Start Your Own Property Letting Business With Little Capital


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Starting your own property business from home with little capital can be done, and this enterprise can be built into a substantial company in quick time if you really work at it, and go about it in the right way. If you don’t have any property of your own, it doesn’t matter, as initially we concentrate on letting other people’s property.

But first things first. You need to decide on the name for your business, then set targets and goals, and thirdly you must carry out adequate Market Research (MR). All these are very important to the future success of your business. Don’t skimp, and don’t rush it. Your name first. What are you going to call your organisation? Most property agencies choose either to operate under the principal’s name, e. g. Jack Jones & Co and then may add the word “Lettings" or “Property", or alternatively a completely different name to your own, such as Oak Properties, or Star Rentals, or Hufftown Lettings. Hufftown is where you live, for the purpose of this article.

Take a little care and time over your choice, because it is very difficult and expensive to change the name at a later date. Have a look in the local papers and see who is operating already. You wouldn’t want to choose Hufftown Rentals if there is already a Hufftown Properties operating locally. That would only confuse and annoy people unnecessarily.

Another thing to bear in mind is a website address. Sooner or later you will need a web presence and it would be nice if the name you choose were also available to register on the Internet. For example, imagine you were toying with the name Oak Properties. I’ve just run a check to see if Oak Properties is available on the net. As it happens it isn’t, but Elm Properties and Ash Properties are, so it might be sensible to choose a name where you can immediately bolt on a website address. By the way I use Lycos to check. They are a massive first-rate company and yet their prices are very reasonable. You can register a name for as little as £1.99 and that is cheap. Ten years ago that would have cost fifty quid. You can quickly check out if the name you want is available at .

If you find a still available web name you like, register it ASAP. You don’t need to use it immediately, but once you’ve got it, it’s yours. Names are being snapped up all the time, and you might be surprised at how few suitable names are still available. Once you have decided on a suitable business name, test market it on a few people. Ask the kids, or your family. They will soon tell you if it’s too cheesy or naff! You want a name that is easy to remember, that you are comfortable with, and reflects what you do.

So we’ve decided a name. Let’s call ourselves Little & Keen, Property Letting Agents. Onward, to setting targets and goals. Let’s set ourselves a modest little target too. Let’s aim to become the Biggest and Best letting agency in Hufftown! There is no point in setting targets too low is there? Set them high, aim high. No one wants to achieve a piffling goal. And a time scale too, what shall we say, 10 years? 5 years? How about 2 years max! That’s it, our target is to become the biggest and best letting agent in Hufftown within 2 years. We’ll start from home to keep costs down, and we may well stay at home, but that doesn’t matter. It’s a tough target, but by no means unachievable. So let’s get started, time is of the essence.

Task 3: Market research. What are we researching and where? These are the things you need to know. Who are your competitors? What do they charge their landlords and their tenants? Where do they advertise? Do they have a website? What properties do they currently have available for rent? What rental cost are they? What are your competitor’s weaknesses and their strengths? And how are you going to find out these things? You’re going into mystery shopper mode, that’s how.

Imagine you have applied for a job at the CIA or MI5 and as a test they have set you that same little task to complete, to obtain all that information within 3 days (always and only by legal methods. ) You’d do it wouldn’t you? Your job application depends on it; course you would. Get yourself a large sheet of paper and a ruler and make a chart. Primitive I know, but effective. Sometimes pencil and paper is still better than technology.

In the left column list all the competitors you have discovered in your area. Your local paper is a mine of information. Leave the bottom line free for your own business name. You can fill that in when you know what you are up against. Column two is for how much each agency charges their tenants. By the way you can only charge a tenant to process their tenancy application. You cannot charge a tenant just to register their requirements. That is illegal and a definite no-no. (That's the law in England, don't know about elsewhere, you would need to check that. )Column’s three and four are how much the competition charge their landlords. Column five is their website address, and column six for any other relevant notes. Now you know what’s required, let’s dig! Do you perhaps feel a little uncomfortable prying into other business’s affairs? Why? Don’t!

It’s normal business practice to strictly monitor the competition. To not do so would be foolish in the extreme. Tesco’s monitor Sainsbury's who monitor Asda-Walmart every single day of the week. Indeed Tesco even boast of their website where they advertise and compare prices on thousands of products within their rival’s stores. Do you think Sainsbury’s and Asda willingly supply this information? I doubt it. It’s market research, and it is what you are doing here.

The first place to find information is on their websites. You can glean an enormous amount of market intelligence through your rival’s (and yes these companies will soon be your rival’s) websites. You’ll be able to fill in and complete quite a few of the boxes on your chart, but probably not all. You might then need to put on your best shoes and smile, and head down to the town and raid their shops.

Some agencies will pester the life out of you as soon as you walk in. They’ll want to know everything about you, you might need to be creative, while others will let you pick up all their brochures and lists, and might not even look up from their vitally important work. When they do speak to you, what do you say? The truth of course. Tell them you are considering buying a buy-to-let property and renting it out, and do they have any information that you can take away and browse at your leisure. Most agencies have information in spades. You will be burdened with all the guff ‘n stuff they’ll give you. Take it all, the whole blinking lot and return home and read it thoroughly from cover to cover. You’ll learn a great deal about property letting through these papers alone.

And is that a fib you told about buying property? Of course it isn't. You ARE thinking about buying and acquiring your own properties, and if you aren’t, you jolly well should be, otherwise what are you doing in the property business? Your ambition must be beyond simply working for others. As soon as you have the necessary deposits you will consider buying, of course you will.

You return home and gleefully complete your chart. It’s looking good, almost every box is filled, except yours at the bottom of the page. You now know how much all your competitors are charging for their main services, so how much are you going to charge? Undercut them of course, massively! NO, YOU ARE NOT, because you don’t need to and no one ever made a great deal of money by massively undercutting. You have several important advantages coming your way, so make the most of them.

In England the first advantage is that you are not registered for Vat. You don’t need to be until your turnover tops £60,000, and that’s fee turnover not rental turnover. It will be a little while before you need to register for Vat, so make the most of your Vat holiday – it won’t last forever. So if your competitor is charging 10% commission to their landlords PLUS Vat on collected rents, if you charged the SAME percentage fee, without the VAT, you already have a significant pricing advantage. Imagine a property is let at £1,000 per month, (nice easy figure) and you both charge 10% commission. The landlord would receive from you £900 net. But from Big & Swanky, your local puffed up rival, the landlord would only receive £882.50. A small advantage you might think, but over a year that tots up to £210, and if the landlord had ten properties, it's then £2100.

Landlords rent out property for one reason and one reason alone, and that is to make money. They notice things like that, believe me. If you are cheaper, they will start to become interested in you. You could in your initial period always reduce your price slightly by say 1% to attract extra instructions. You could do the management for 9%, that’s perfectly possible, and it would make quite a difference to a landlord with multi properties. But be careful about reducing your fees too much. You’d be much better off thinking of ways to increase fees. It’s your first USP, Unique Selling Point, courtesy of the Vat man. You’re Vat FREE.

Most property Agents offer two separate services. Find a tenant only, OR Find a Tenant and Manage the property on an ongoing basis. Make sure you have the two distinct services clear in your own mind, for if you are confused, your landlord will certainly be too. Service A is to locate and reference a suitable tenant, prepare the paperwork, collect the first month’s rental and deposit, book them into the property, take a fee and Bob's your uncle, that’s it. (Yes I know there are other matters to think about like gas safety and reading meters but we’ll come back to that). It’s quick, it’s clean, and you have no ongoing worries or responsibilities. But after your one-off fee, you have no ongoing income either.

Service B is much better from that point of view. Here you find and reference a suitable tenant, prepare the paperwork, you book them into the property, and then you manage it on an ongoing basis. That means collecting the rent forever, and a fee every month for doing so. Some tenants stay in the same property for twenty years, more than you might think. All you have to do is check the property occasionally, and generally oversee that the letting is running smoothly and satisfactorily for both parties. If you can keep increasing the number of properties you manage each month, you will see your fee total, your income, steadily rising. These regular fees will also provide you with fallback income which is especially reassuring when times are quiet.

Think back to your chart. Column 3 is for your competitor’s charges to landlords for finding a tenant only; column 4, their charge for ongoing management. Two distinctly separate things. Don’t confuse them. Once you have completed your chart, you can pencil in your own charges. You now know how much you will be charging your clients and how much you will be receiving on any particular let, from landlords and tenants, they BOTH pay you fees. Incidentally some agents charge a set fee for Service A, find a tenant only. Perhaps £300, or a fraction of the monthly rental, say half or three quarters of a month’s rent. Half of a thousand pounds is obviously preferable to a set fee of £300. Make sure you set your fees as HIGH AS YOU POSSIBLY CAN, while always remaining competitive.

Think about it, check and recheck what Big & Swanky charge, and Sleepy & Dull too. Then fix your prices accordingly, and remember they are NOT cast in stone. You are a small independent. You can always haggle and/or adjust your fees at any time as it suits you. Big & Swanky would probably have to have three board meetings and refer to head office before they could or would amend theirs. It’s another advantage of being small and independent, of owning your own business, of controlling your own destiny. You can be quick on your feet, you can compete at all levels.

Look out for the next article in this series entitled “Finding Properties To Rent" and best of luck with your business.

David Carter’s latest published work is SPLAM! Successful Property Letting And Management. Splam! Contains over 240 pages of hints and tips on how to start your own property business on a limited budget, and how to successfully let residential property. You can view actual extracts of the book at and order a download or hard copy at this site. He also runs a holiday cottage website where you can access over 7,000 cottages, apartments and villas worldwide at


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