Diversification is the name of the game in these difficult times, says Edel Morgan
THE RECESSION has seen many business and tradespeople having to diversify and become more entrepreneurial to survive.
Some estate agents, for example, have had to cast their net to more lucrative waters - i.e. the lettings market. Although not exactly a licence to print money, with people now opting to rent rather than buy, the rental market is currently a better prospect than residential sales.
But with so many agents now moving over to lettings, it is becoming harder to grab a slice of the market. One tactic to get people's attention is to introduce something new. I was intrigued by an ad from north city centre estate agent Bartholomew McElhatton with the headline "Landlords...don't lose a cent in rent. Even if the property is vacant or the tenant has stopped paying the rent."
The company says it guarantees rental income for one year whether there's a tenant or not. (See www.guaranteeyourrent.com.)
McElhatton says his company is the first to introduce such a scheme to Ireland. While there are no fees as such, the catch is that the landlord is paid below the market rent. Refusing to be drawn on exactly how much below, he says the rent he offers a landlord depends on the location and the condition of the property.
After much probing and asking for a general example, he said that he couldn't give figures because it is commercially sensitive information - his competitors are everywhere - but it would amount to more than the 8-12 per cent a letting agent would typically take in fees. He declined to say how much more. Perhaps MI5 could be a-calling if he ever decides to diversify into another career?
He says it's "inevitable" that agents are drifting into lettings and property management given the state of the residential market but there could be turbulent waters ahead.
In June Daft.ie estimated that 46 per cent of residential lettings go to overseas workers, but with current projections that non nationals are five times more likely to lose their jobs, landlords could be facing longer vacancy periods in the future.
Although some estate agents are trying to rally confidence in the sales marking by claiming that mortgage repayments can be cheaper than rent, it appears what's buoying lettings for the moment is that buyers are not ready to move off the fence. Sherry FitzGerald recently had an ad with a list of examples of how renting is more expensive than buying. Based on a first-time buyer couple taking out a 92 per cent mortgage over 35 years at a two-year fixed rate of 5.2 per cent, APR 5.58 per cent, among the examples it said you can buy a one-bed in 57 Shanagarry in Milltown "from" €1,125 per month while rent is €1,150 per month and a two-bed in Premier Square, Finglas Road "from" €1,144 per month, while renting is €1,200.
Of course this depends on there being two first-time buyers, them having a sufficient deposit to put on the property and the confidence to take the plunge while knowing it's possible the price could drop further. Another factor is that given the large stock of rental property, rents are falling with landlord's open to negotiation.
Another group who are apparently becoming more willing to diversify are tradesmen.
Onlinetradesmen.com said they've evidence they are now willing to take on work they wouldn't have considered before. When the economy was booming kidnap was the only way to get one through your door to do a small repair. Now the tide has turned to such an extent some are becoming handymen and flat pack assemblers. "Doing multiple jobs each day can now be as lucrative for tradesmen as doing bigger jobs," explained a spokesperson for the website. So for once "no job too big or small" is actually true.