Property Investors, Affiliate Income and HIPS – More Baloney!
I recently received a magazine in which a Get Rich Quick in Property Guru was harping on about how “Property Investors” – (funny that these guys never refer to “landlords” who have to actually get in and do real work like arrange to get fixes for boilers, sort out tenant issues etc, but let’s leave that aside for now) – could make money by other sources of income linked to their property sourcing business.
The guru referred to how investors could make thousands each month by becoming a letting agent for other, er, investors, how they could do a spot of mortgage broking on the side or how they could make lots of cash each month by running affiliate schemes for landlord products such as we do on our Landlords Services page.
Not Much Money Here!
What a load of baloney as they would say in New York. Most letting agents I know do OK, but they are not rich – and the ones who are work is very hard indeed involving long and antisocial hours dealing with difficult tenants and more than a few awkward landlords. And as the barriers to entry to become a letting agent are so low, profits have always been and always will be on the low side.
The same goes for mortgage broking. Right now mortgage brokers are having a very hard time in the buy to let arena as volumes are low and as more and more people go direct to the lenders (hardly surprising as there are so few lenders to choose from.)
And as to other affiliate income, well I know from experience that even with our own busy site there is not much money to be had from that source either. A few hundred pounds a year from one of our insurance affiliates and that’s about it.
Maybe these guys have to promote these ideas about other sources of income because too many of their clients are so disappointed when they find they cannot make the £s they were promised at seminars through the route of No Money Down or Cash Out Property Deals, so they have to sweeten the clients up a bit and tell them the Holy Grail of Get Rich Quick is still possible. As they also say in New York, again, Forgeddaboutit!
So, Labour is the only political party that wants to persevere with the Home Information Pack (or HIP) in its current form.
My view is that it was too bad the current Government allowed itself to be bludgeoned into jettisoning the Property Valuation Report, which was to have been in the HIP when it was originally designed.
What should have happened was the Valuation Report should have been included in the pack provided by the seller.
It could have been made to be valid (or extendable at low cost) for say a minimum period of 6 months. And as a neat side benefit, this would have helped ensure only serious sellers put their property on the market in the first place – which seems sensible to me.
So why didn’t they do this?
The Banks and RICS Scuppered the Best Plans
Well, had they have done this, the net effect would have been to reduce the total number of valuations that were done overall and so this idea may not have appealed to those with vested interests in the valuation business – namely RICS and the mortgage lending banks.
The banks (who make a pretty penny out of Valuation Reports) moaned about how no buyer would trust a report produced by a vendor. (Really, even one done by an esteemed RICS surveyor?)
Unfortunately, the government (back then as close to big business as ever) believed this nonsense and didn’t face down the surveying industry or the banks on the issue.
And so we ended up with a HIP that, without a valuation, was not much use to buyers at all.
MORE ABOUT LETTINGFOCUS AND WHAT WE DO
LettingFocus.com is the home of Landlord Information.
I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.
Services to Businesses and the Public Sector
Primarily I am a consultant to banks, local authorities, social housing providers, insurers and other organisations – helping them with their landlord facing or buy to let product strategies and services.
For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the media.
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We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
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