Want to sell your rent roll in 2023? Here’s what a valuer is looking for in terms of volume, structure, location and more.
Selling a rent roll is one way to access a rapid injection of cash or take your real estate agency in a good direction. However, to ensure you sell for the right price, you need to be aware of what buyers are looking for.
As you prepare to sell, keep the following in mind.
Profitability
Of course, your rent roll’s ability to make money is important to a buyer. The bigger the gap between revenue and expenses, the better.
Before you sell, examine your budget and look for ways to automate, streamline and even delegate to an offshore team. There may also be the potential for easier ‘wins’ by managing a clients’ entire portfolio if they have multiple properties.
Administration and organisation
Being able to hand over accurate and up-to-date paperwork (or share corresponding online documents) is essential.
A buyer will want to check authorities to check they are in the correct name and make sure they reflect current legislation. They also need to be current; some rent rolls have expired authorities which mean they technically aren’t legally allowed to manage the property and collect fees for doing so.
The way your team stores and manages client information should be straightforward and highly organised. Think about communication as well; ideally you will use apps and systems to make everyone’s lives easier.
Compliance
Speaking of authorities and written agreements, rental property legislation changes on a regular basis. A buyer will be looking for a rent roll with properties in good condition, which meet the required standards.
From smoke alarms to recycling bins and from heaters and locks on doors, before you list a rent roll you need to ensure each home ticks the required boxes for compliance. Visit consumer.vic.gov.au for a full list of rental property minimum standards.
Systems management
Empty rental properties mean money lost for all stakeholders. A sale may be dependent on the majority of homes on your rent roll being occupied so do what you can to minimise vacancy before putting your offering to the market.
Overdue payments are another red flag. No renter should be more than a week or two in arrears or the buyer will have questions.
Balance across owners
While having a single rental property owner with a few properties is a good thing, having too high a ratio in this area puts you at risk.
You don’t want a low number of owners with a huge number of properties (e.g. two owners with 50 properties between them) as having a few of them leave will result in a major gap in income.
Your rent roll is partly valued on its potential for stability so if you can show your owners have been with you for the long term you have the potential for a greater sale result.
Staff
Finally, your property managers may be included in the transfer of ownership so you will need to prove they are well looked-after and do the right thing by renters and rental property owners. Ensuring they are not overworked and can rely on good systems will make it easier to package your rent roll for a sale.
Reputation
The other thing is reputation. Hopefully, you can share reviews on Google and other platforms which demonstrate the satisfaction levels of your clients. Find a way to request reviews and feedback from happy clients and share this when your rent roll is being valued.
As an extra point, the buyer and valuer will be looking to calculate future revenue potential. This won’t be entirely based on past performance so agree to the way the value will be calculated before you start negotiations.