A rent roll can generate almost one in five sales for an agency, according to data from the latest Macquarie Relationship Banking 2012 Residential Real Estate Benchmarking Report.
The report, which was released late last month, found that Qld-based agencies are the most effective at converting sales from their rent rolls (19 per cent), followed by small agencies (17 per cent), WA agencies (16 per cent) and NSW and medium-sized agencies (15 per cent).
Large agencies (13 per cent) come in just ahead of agencies in South Australia and Victoria (12 per cent).
“More than half (56 per cent) of agencies rely on less than 10 per cent of their total sales numbers coming from their rent roll, up from 48 per cent of agencies in 2009,” the report said.
“Only four per cent of agencies reported more than 60 per cent of their total sales are sourced from rent rolls. Qld and small agencies feature in this regard as seven per cent of agencies report that revenue from the sale of properties on their rent roll accounted for more than 60 per cent of their total sales revenue.”
Gerri Keays, corporate property management executive at Ray White, told Real Estate Business that is was critical that agencies tried to keep rent roll properties on their books, even when they were being sold.
“What we try and do is sell the property back to the investors we’ve got,” she said.
“During week zero, what we try and do is hold a preview open for inspection only for our landlords. We encourage principals to send it out as a hard-copy invitation because it has a greater impact. And we do just the one preview inspection before it opens up to the public.
“It also makes landlords feel special, even if they can’t go. If you’ve got 250-300 landlords and one per cent show up to the open, that’s still three people.
“And most investors are interested in having the property tenanted. They don’t want vacant properties, they want a property with a good tenant in it,” Ms Keays said.
“It works really well and some offices are getting 60 per cent return on the properties that are coming back to the rent roll,” she continued.
“If it’s already rented, there's faster settlement and the buyer has an income the second the property settles.”
But selling properties from the rent roll to an owner-occupier can eventually dent a property management portfolio, Braden Walters, from Sydney-based independent agency True Property, said.
“The aim is to sell the rent roll properties to other investors and retain the management of them, therefore maximising the business value and the cash flow,” he told Real Estate Business.
The report, which is made up of responses from 416 agencies across Australia, revealed the national average for sales taken from the rent roll sat at 16 per cent, a figure Mr Walters didn’t find all too surprising.
“The figure of 16 per cent in the survey would be a fair percentage across the country, but it does vary from year to year based on sales market conditions and it can vary from city to city,” he said.
“My advice, don’t think of them as a free sale or an easy sale because they aren’t,” he said. “Treat the landlord like a new listing client and service them like you would any other. The process will be a positive one and they are more inclined to refer more business to you and you will win further in the end.”