how much Does a letting or estate agent earn?
How Much Do Letting and Estate Agents Earn?
As a letting or estate agent you can realistically earn in excess of £100,000 per year
Follow our training and guidance and you can set up a Letting or Estate Agency in no time. Continue reading to find out how you can achieve a satisfying income in either lettings, sales or both – full time or part time, from home or office.
Letting Agent Income
There are two main services that Letting Agents offer to property owners:
The first is the rent-only service (also called “tenant find”) – this is where you find a tenant, and the landlord manages the property afterwards
The second is the full management service – this is where you continue to manage the property after you’ve found a tenant
The rent-only service provides sizeable fees of around 3 weeks rent for each tenant found. However, the management of tenanted properties is particularly attractive due to the residual commission income. This is because your total residual monthly income grows with each property added. So in year 2, you’re still earning from year 1 without any extra work, and so on.
All tenants pay their rent by standing order directly into your agency bank account. This system is automatic, and you don’t physically collect any money and there is no need to send reminders. Once each payment has reached your account, you deduct your commission and forward the balance to the landlord.
Management fees vary, but we have used the UK average commission rate of 12% of the rent.
Letting Agent Income Growth
At the modest work rate of just one property added each week, the following examples show how your commission income quickly builds
a) on a monthly basis, and
b) on a yearly basis.
Bear in mind that the process is cumulative – existing properties are providing ongoing commission each month while you’re adding new ones. The examples are based on average UK rent of £900 per month, and just 1 property per week.
At average rentals of £900 per month your commission income at end of:
Year 1 = £64,800,
Year 2 = £129,600,
Year 3 = £194,400 and so on…
Subject to market conditions and a little effort, you could well exceed these figures using our methods and techniques. Remember that many landlords will give you not just one property, but their entire portfolio to manage. It is not uncommon these days for a single branch letting agency to manage over 500 properties.
Additional Revenue Streams Available to Letting Agents
The above fees do not include additional streams of income available to letting agents such as:
Estate Agent Income
Most estate agents work on commissions of 1% to 1.5% of the sale price of a property. This means that for an average UK property, you’ll receive around £3500.
Selling just 2 properties per month will generate an income of around £7000.
If you’re in London or anywhere else that’s above the UK average house price, your income can be significantly more.
The advantage of running an estate agency is that you can handle several sales simultaneously, each of which can be worth £thousands. By having several properties on your books at once, your role will be to identify buyers for the properties that you’re selling. When you become an estate agent you’ll be able to use the processes and methods that we show you to get in a position to start generating this income.
Once a price has been agreed, you’ll be carrying out some very simple admin tasks. This happens while the solicitors are working on the contracts. On the day of completion, the sellers solicitor will pay your commission directly into your bank account.
Property values vary across the country, so in the examples below we’ve used an average property value of £230,000 and a typical commission rate of 1.5%.
Estate Agent Income Growth
Starting at a rate of just 1 property per month rising to 3 properties per month after 12 months, at the average UK property price of £230,000 and a commission of 1.5%, the following examples show how your commission income quickly builds. On top of this you can add your fixed fee income for marketing properties.
Running an estate agency alongside a letting agency is particularly attractive. You’ll be able to leverage your combined skill-set and achieve the win-win where you sell a property to an investor, who then asks you to find a tenant and manage it for him/her.
At an average house price of £230,000 and commission of 1.5%, your annual income growth can look like this:
Year 1 = £104,500
Year 2 = £212,500
Year 3 = £319,500 and so on…
Subject to market conditions and a little effort, you could well exceed these figures using our methods and techniques.
The Ideal Business
As well as being able to run the business full or part-time, from home or an office, if you’re running both a lettings and estate agency business business, the lettings business will feed clients to your estate agency business, and vice versa.
For example, someone who’s thinking of selling may decide to rent due to a change in circumstances. Someone who’s been renting with you may decide to sell with you or buy one of your properties. Either way, you’ll be able to help with a professional service, and you benefit financially either way while providing a useful and much needed local service.
This is one of the few businesses in the UK where it’s truly recession proof. Even in times of recession, your lettings commissions continue to be paid, while in times of growth, property sales can soar – it’s really the best of both worlds.
In fact, you’ll effectively have 3 businesses in one: tenant find, property management and property sales.
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