The 7 Deal-Breakers Checklist: What to Check Before You Buy a Lettings Agency
Every year, a steady stream of people decide the smartest way into the lettings business isn't to build one from scratch, it's to buy one that already works. Established landlords, a trading name people recognise, income from day one. On paper, it looks like the sensible route.
Then completion happens, and the surprises start.
At Russou, we sit on the buyer's side of the table for a living. We've seen good businesses bought well, and good businesses bought badly, and the difference almost never comes down to the price paid. It comes down to what got checked before the cheque cleared.
Here are the seven things worth checking properly, before you fall in love with the numbers. Think of it as your buying a lettings agency checklist.
Customer and landlord concentration. A portfolio that looks healthy on paper can be one landlord's phone call away from losing half its income. Ask for the breakdown before you ask for anything else.
The contracts that don't survive completion. Management agreements, supplier deals and referral arrangements can quietly end, or become renegotiable, the moment ownership changes. Read the small print, not the summary.
The person the business actually runs on. Some agencies run on a system. Others run on one person's mobile number, and that person is usually the one selling to you.
Licences, compliance and software lock-in. Client Money Protection, redress scheme membership, and the software the whole operation depends on. If any of it isn't transferable, that's not a technicality, that's a liability with your name on it.
The lease, properly read. Not the summary a broker gives you. The actual document, the actual break clauses, the actual remaining term.
The database you're about to inherit. Every agency has a CRM. Not every agency has a CRM anyone would want to inherit. Duplicate records, missing arrears history and half-migrated data don't show up in the sale particulars.
The numbers behind the numbers. Addbacks, one-off income treated as recurring, personal expenses run through the business. The multiple you're paying should be applied to profit that's actually going to repeat.
None of these are reasons to walk away on their own. They're reasons to ask better questions before you commit, and to know exactly what you're taking on when you do.
Over the next few weeks we're going deeper into each one, including the true stories behind a couple of them.
That's what we do at Russou.
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