This week, I interviewed our Investor Manager, Jessica Moore, about our newly implemented investor-centric strategy aimed at reducing void periods across our portfolio.
Jenna: First things first, how would you summarise your role here at Property Moose?
Jessica: That might be hard to do! I’ve been at Property Moose for over 2 years now, and I find that I do a bit of everything. My main responsibility includes managing the process of the investments from start to finish, whether that’s the initial due diligence on a property to assess the potential of it as an investment, to instructing the solicitors at the end of the term if the investors vote to sell. More recently, this has also included managing properties throughout the term with a hands-on approach, whilst ensuring the investors are happy and always fully informed.
Jenna: What was the first thing the investment team decided to tackle when it came to addressing tenancy issues?
Jessica: We decided to take a step back, look at what we were currently doing and find out why it wasn’t always working. Previously, we would look at properties that were tenanted, acquire proof of their tenancy and then proceed with the remaining process. Under these circumstances, properties listed on our platform would be advertised as tenanted - as they were. However, after we acquired some of these properties, we would often learn that the tenant had plans to leave, was due to be evicted or was in arrears. We have now changed this process so that when we’re sourcing a property, even if an existing tenant is in place, we will still treat them as a new one. This involves referencing them, looking at their payment history and ensuring learning about their long-term plans. If we’re uncertain, we may still purchase the property, but we won’t list the opportunity on our platform as ‘tenanted’ until we have a better understanding of their commitment. This process now gives us a much more accurate idea about the tenant’s plans, increasing the potential for regular returns.
Jenna: Does that slow down the sourcing process?
Jessica: Potentially, yes. But we believe it’s a necessary step towards sourcing the right tenants and avoiding irregular returns. A lot of the time, investors try to sell tenanted properties and include the existing tenancy as a sales feature, though in reality, if it was tenanted with committed tenants, who were paying on time and looked after the property, it’s unlikely that they would want to sell it.
Jenna: That makes sense. What other changes have been implemented?
Jessica: So the second big strategy change that we implemented was bringing the property management slightly more in-house. When we have purchased properties or sourced tenants in the past, it had always been through a local agency. Of course, this has its own advantages in terms of expert local knowledge, however, it can be difficult to manage such a vast number of local companies across the country. In addition to this, when you’re dealing with several local management companies across the UK, each of which has a bank of around 200 properties, their focus can’t always be on our property, which is what we required. So, we have now we have tried to make that more in-house, and have implemented a software system called PropCo, which we’re now fully trained on. It’s an incredibly slick system which automates a lot of the sourcing process and helps us ensure our procedure is streamlined and task driven. So for example, we can make sure tasks are in place to speak to tenants and so on.
Jenna: That’s great. So, naturally, the level of communication we have with tenants has increased?
Jessica: Definitely. The feedback that we’ve received from the tenants is that the customer service has significantly improved. Previously, when a property managed by an external agency, the tenants rarely heard from the agent. What we’re doing is touching base with them every three months, making sure they’re comfortable and happy and addressing any questions they may have. So obviously, the happier the tenant is, the longer they’re likely to say. And of course, the more likely they are to look after the property and keep it in a good condition. This increase in communication has meant that we can be a lot more proactive when dealing with repairs. We found that previously, small issues such as gutter blockage wasn’t being dealt with by the agents, or the agents weren’t returning tenants’ calls, or they were having issues booking people in to fix the issue. So the faults would get worse over time, and in some cases lead to damp in the bedroom or bathroom. By touching base with tenants frequently, we can address these issues more quickly and efficiently. We can send out someone from our maintenance team and repair the small issue before it turns in to a big one, hopefully saving investors any future costs.
Jenna: How else have the costs been affected by making this process more in-house?
Jessica: When we used external agents in the past, a lot of the maintenance was in their hands, so they could choose someone who had an expensive hourly rate. Now, we’re a lot more practical when it comes to this and we try to make sure we know what the cost of the work should be so that we know we’re paying the right price. Through recommendations and previous delivery, we have prequalified all maintenance teams we use. This has helped us build a strong network across the UK to support our maintenance issues.
Jenna: What other changes have been made to manage the maintenance?
Jessica: We understand that investors have commented particularly when they’ve received less than their expected returns on the basis of maintenance costs. Of course, this is an issue associated with both traditional property investment and crowdfunding property investment, but as we’re on a mission to simplify things, we’ve introduced a change which could reduce the risk of any big costs. We have implemented low-cost insurances right across our whole portfolio. A typical example of this is that we now have an insurance on every property that costs around £13 a month, which gives us a breakdown cover for boilers, leak drainage, electrical issues, broken locks and a variety of other works. Without this, the call out fee alone would cost more than the annual subscription, which is why we believe it’s a fantastic step in the right direction to making the process a lot smoother. Furthermore, we also now ensure every property that is launched has a provision fund in place. For the first 20 or so properties, that was not the case and meant that whenever there was a repair, the cost came immediately out of the provision. At least now with a provision fund, we can hopefully avoid using the rent for unforeseen costs for a period of time.
Jenna: How successful have these changes been?
Jessica: We started to make these changes at the start of January. At that time, we had 18 vacant properties. In the space of 3 months, we’ve reduced this number down to 8. We hope to get the final few tenanted as soon as possible. We’re speaking to the agents on a weekly basis to review the views they’ve had on the website, make note of any enquires made over the weekend and implement any feedback on the listing. Once we have this information, we look at each individual property and figure out new ways to move forward. We appreciate that it’s frustrating for investors, but we’re doing everything we can to get the final few tenanted.
Disclaimer and Legals
Property Moose does not provide any advice in relation to investments and you must rely on your own due diligence before investing. Please remember that property prices can go down as well as up and that all figures, rates and yields are projections only and should not be relied on. If in doubt, please seek the advice of a financial adviser. Your capital is at risk if you invest. This post has been approved as a financial promotion by Resolution Compliance Limited.
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