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So you think you can grow your rent roll?

By Hermione Gardiner
30 May 2014 | 3 minute read

We see one very common goal amongst many property management businesses across Australia and New Zealand... rent roll growth! And why not?  

 

Blogger: Hermione Gardiner, business manager, Real+

 

There are many different reasons a business will choose to grow – growth, asset value, profit, sales farming, ego and more... Whatever your reason it’s important to firstly be sure of that reason – to establish your WHY before setting your goals, as this will affect the strategies and plans you put into place to get there.

Once you’re sure of your WHY and have set your goals, you will either go down the path of organic growth or potentially look at the acquisition of a rent roll, or perhaps a combination of the two. Which is the better option for you? Well, again this will depend on your WHY but it is also vital to weigh up the pros and cons of each strategy.

Organic growth – where a BDM is put in place to prospectappraise and grow is the most common way of growing your rent roll. The great thing about this option is that you can control quality, location and fees of properties, potentially avoid bad landlords and problem properties. However, this option can be a slow way of growing due to the time taken in building landlord relationships, and placing a new person onboard the rent roll may not be profitable until numbers start to grow.

However, more and more agencies are looking to purchase a rent roll as a fast way to grow. According to Harcourts, the benefits of buying a rent roll include:

Pros

  • Increased size gives business momentum
  • Increased cash flow
  • Irons out fluctuations of a sales department
  • Eliminates a competitor from your local area
  • Increases networks and database
  • More opportunities for sales department

However, they advise we must also consider the cons:

  • Landlord rejection
  • Buying existing issues
  • Potentially poorly run portfolio
  • Integration/transition issues

If purchasing a rent roll is something you have considered at some stage, this is not something to rush into. There are many factors which need to be considered and it is strongly advisable to have an expert guide you through the process.

This week we were joined by Matt Ciallella from MC Rent Roll to take us through all the considerations and variables you need to consider when purchasing (and selling) rent rolls. If you are a member of Real+ you can watch the recorded webinar anytime on our platform.

Do you have an industry update?

 

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