Buying a rent roll can be a rewarding investment, just be sure to do your research.
The following factors will impact the value of your purchase, and just as importantly, a bank’s willingness to finance your new venture:
- Ancillary Fees: Does the seller charge any ancillary fees (i.e. postage, bank transaction fees, re-letting fees, periodical inspection fees, exit fees)? Is there room to add or increase any of these fees?
- Arrears: What percentage of properties are in rent arrears and how long have they been in arrears? How does this affect the value?
- Attention-to-detail: Are all agency authorities/files up-to-date? If not, what potential risk does this pose?
- Condition: Have regular inspections been carried out on every property? If not, how will this impact the time spent in dealing with repairs and maintenance?
- Court Actions: Are there tribunal hearing or insurance claims pending? Consider how time consuming and costly these could be.
- Location & Property Type: What is the geographical spread and general type of properties being managed (i.e. furnished/unfurnished, houses/units, age)?
- Maintenance: How many outstanding maintenance issues are there?
- Management Transition: Is it possible to set up an agreement to access landlord/tenancy information and start transitioning management authorities before settlement?
- Payment: What rent payment/statement methods are used? Is a good direct-debit-rent transfer system already in place?
- Ratio: What is the ratio of landlords to properties? The higher the ratio, the riskier the portfolio is perceived.
- Rent: What are the average rents and management/letting fees and how recently were these fees increased? What has been the rent roll growth/loss over the last few years?
- Software: What property management software is being used? How easy will it be to integrate?
- Staff: What is the current staffing structure, cost and quality? Will key staff stay on?
- Term: What is the average management term of the rent roll? Generally, the longer the management has been held the greater the perceived value.
- Vacancies: What are the number and duration of vacancies? Why?
If you are considering buying a rent roll and simply want some guidance on where to start, call us on 07 3899 2866 or fill out your details below and we’ll be in touch shortly.