Ben has a small apartment in central Edinburgh. It is fully furnished and in OK condition but its appliances require PAT testing, the smoke alarm needs to be replaced, new bedding needs to be purchased and one of the rooms needs a new lick of paint. The market rent for the property is £1000pm. Ben would like S.H. Property Services to manage his property.
S.H. Property Services send an agent round to Ben’s apartment to assess exactly what it needs to maximise its potential rental price whilst keeping the costs down and shares this information with Ben. Ben is happy with the agent’s summary and agrees to sign contracts. The agent finds the best deals and tradesmen, receives quotes from them then forwards these over to Ben. Once Ben is happy and agrees to everything then the agent gives the tradesmen the go-ahead and sorts everything out. In only a couple of weeks, the apartment is completely ready and advertisement begins.
Ben had 3 management agreements to choose from. Let’s look at how things would go for Ben in each option assuming he signs a year-long contract (in each case S.H. Property Services are still responsible for doing all the relevant work and arranging for all the relevant services required).
Option 1: S.H. Property Services pays Ben £1050pm, pays for everything and does all the work but Ben doesn’t receive any of the guest’s booking monies.
Option 2: S.H. Property Services does all the work but Ben pays for everything and Ben receives 90% of the guest’s booking monies.
Option 3: S.H. Property Services pays Ben £450pm and splits the total costs and profits with Ben 50/50.
All our case studies are all hypothetical and as such, the outcomes are hypothetical too.