A conversation that I’ve recently had with a lot of sellers has been around a term we call portfolio spread.

Investor sales and portfolio growth over the last 2-3 years have caused rent roll portfolios to spread further and further apart. Having a high portfolio spread can make it harder to find a buyer and impacts the value of your rent roll.

Thankfully, there are ways you can manage your portfolio spread when going to market.

cost to serve

During the sale process, one of the figures we look at is cost to serve. This is a measurement of ongoing cost factors that are required to service the portfolio. With a high portfolio spread, this cost can balloon to quite a nasty size as it takes much longer for staff to run around in cars, servicing properties and looking after them, creating significant wage costs that go straight to your expenses.

 

separating the portfolio

When you do come into the market with these portfolios that have such a large geographical spread, a potential solution can be separating the portfolio into two or more bits, giving you separate portfolios with a lower spread.

This might mean you take 20-30 properties, for example, on the far north side, and sell them off separately from the rest of the portfolio.

What this also does is it gives you a better average annual management income and possibly a higher multiple on the balance of the portfolio if the far-reaching ones are out of play.

 

we’re here to help

Taking a look at your portfolio spread is definitely worthwhile before heading to market. If you need some guidance or want to have a chat about modelling your portfolio spread and making it more sellable for the balance, get in touch with us at oneplace@businessdepot.com.au or give us a buzz on 1300BDEPOT.

 

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