Paul Collins: Straight to the point on property

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By his own admission Paul Collins pulls no punches when it comes to the world of property management – even if telling it straight risks a prospective landlord having second thoughts…

In fact, his direct, “warts and all” approach has resulted in potential clients going elsewhere, discovering a few hard truths and returning to Paul a few months down the line, wishing they had been more receptive to his original warnings.

Renting out a second property, whether it’s an inherited pile, a property that’s suddenly become “surplus” because you and your partner have moved in together, or available while you try a taste of living abroad, can be an exciting time.

On the plus side, there’s the attractive prospect of earning a tidy income, but letting out your property can also be fraught with hassles. You need to do your homework and choose your management agency with care.

After nearly 20 years at the helm of Belvoir! Lettings’ Lincoln area franchise, Paul knows the industry inside out. His experience means that he doesn’t shy away from telling would-be landlords that there’s more to renting out their property than handing a set of keys to their management agency and waiting for the cash to roll in.

For a start there’s the sticky matter of red tape, an area which has become increasingly complex with the need to protect landlords’ and tenants’ interests. Just as difficult is getting to grips with people’s individual perceptions and expectations.

And, irrespective of whether they are a prospective landlord or a tenant, who has been rigorously credit-checked, people’s personal standards never cease to surprise.

So why was Paul attracted to this industry in the first place? Unsurprisingly, perhaps, it wasn’t his original intention but, in common with people from all walks of life, he felt he could offer a better service than he had experienced himself.

“Belvoir was originally a cottage industry, which was started by entrepreneurial couple, retired Wing Commander Mike Goddard and his wife Stephanie, who got the business going by managing an initial 100 properties. Mike is still Belvoir’s Chairman,” said Paul.

“In December 1996, I was an army warrant officer based at RAF Digby and I was coming-up to finishing my military career. I had always wanted to be a policeman, so I decided to apply.

“Sadly, my spelling let me down back then, although I have to say that it’s improved greatly since!

Photo: Steve Smailes for Lincolnshire Business

Photo: Steve Smailes for Lincolnshire Business

Spotting an opportunity

“One day I was sitting at my desk at RAF Digby, flicking through a copy of The Pathfinder, a magazine featuring adverts placed by non-military organisations and designed to attract the attention of soon-to-be ex-service people.

“I spotted a double page about Belvoir! Property Management and I thought ‘I can do that!’ I had let my own house whilst working in Africa and experienced terrible service.

“You could say that I had found myself on the wrong side of what I would deem to be good property management,” said Paul.

“I had no experience at all of running a business or managing property, but I rang Mike Goddard and said: ‘I’m interested in your Lincoln area franchise. Is it still free?’ I met him the following Tuesday, we had a chat and the rest is history.”

Paul, set up his business in early December 1996 and left the Army in February 1997 (he had leave due). After a week’s training with Mike – at Mr Goddard’s house – he started working from home.
Paul had a pile of leaflets printed, hand-delivered them on his territory in the morning, then went home and waited for the phone to ring and it did.

At the end of his first year, Paul had more than 50 properties on his books, ranging from one-bedroomed bungalows to five-bedroomed houses. That figure had grown to 160 by the end of his second year.

In 1999, he opened an office in Lincoln’s lower High Street and Paul’s gradual expansion means he now employs 12 people.

Photo: Steve Smailes for Lincolnshire Business

Photo: Steve Smailes for Lincolnshire Business

Opening people’s eyes

But some things haven’t changed from the early days, especially the need to open prospective landlord’s eyes to what is involved in letting out their property and, in the case of tenants, their responsibilities when they opt to rent, rather than buy.

“I tell people that no-one will look after their house as well as they do. If it is a palace at the start it might not be at the end. Renting out simply doesn’t suit everyone,” said Paul.

“One lady who approached me had recently had a baby and was very hormonal. I said: ‘Think carefully about letting your property – if your heart is in your house, don’t let it.’ She clearly loved her home, but she needed to see it as a business opportunity.

“That particular lady decided to go elsewhere, but she came back eight months later. She admitted that I’d upset her, but she had subsequently been let down, and finally decided to bring her business to me.”

Another issue people renting out their home sometimes fail to consider are the tax implications, but this is payable in line with how much profit they make, after expenses are taken into account.

Photo: Steve Smailes for Lincolnshire Business

Photo: Steve Smailes for Lincolnshire Business

Wills are important

“I was advising a client who had a portfolio of properties which was worth £7.5 million. However, they hadn’t made a will and they hadn’t done any Inheritance Tax of Capital Gains Tax planning,” said Paul.

“The upshot was, that if he and his wife got killed in a car crash, their children, or whoever was left handling their estate, would find themselves liable for death duties – and a tax bill of three million, which would need paying before the houses were sold off.

“I had another instance where a couple had got together, but were not married. The man had an ‘out-of-date’ will, but the woman – who had two children – didn’t have one at all. w”If they had been killed in a crash, the woman said her sister would look after the children. However, she had never asked her and she had no will. Neither had her new partner adjusted his Will to ensure that she would benefit if anything happened to him.”

Paul’s services cover everything from property appraisals, to spelling out the legalities of letting and renting, drawing up tenant-landlord agreements, dealing with deposits and all sorts of issues – right down to tenant complaints about problems such as a wonky boiler or blocked drain.

But, problems aside, is renting out your property a good option financially?

“With the bank rate as it is, people will get a better yield than simply putting money into a bank account. The “accidental” landlord (one/two properties) will get, say, 5% to 6% net, while a landlord with a portfolio of properties will, of course, do better,” said Paul, who also has a student lettings business.

“If you have a property which you let to students, you could enjoy a return of up to 10%. This is because they pay rent weekly, on a room-basis.

“A three-bedroomed terraced house let to a family might earn you £600 a month, but if you turned a property into a four-bedroomed let for students, you could get, say, £1,400 a month.”

There’s been a tremendous rise in interest in the buy-to-let market in Lincoln over recent years and also a general rise in interest in renting, after homebuyers found themselves in negative equity territory during two recessions – although buying is on the up again.

“Interestingly, in 1996 an average of only 9% of properties were let in Lincoln. Now that figure has risen to 23% and, of course, much of that is due to the University of Lincoln effect,” said Paul.

However, the UK has some catching-up to do. In Europe, as a whole, 60% of people rent.

Paul, who has 850 tenancies on his books, is arguably the biggest lettings agency in Lincoln. But, if he did it again, would he still take the franchise route into business?

“Definitely, there are so many benefits and plenty of support, right down to our recently revamped website,” he said.

Paul is married to Sharon. He has two children – Adam (38) and Davina (36) and two step-children, Leanne (31) and Daniel (27).

This feature interview was first published in issue 70 of the Lincolnshire Business weekly magazine.