While it may look straight forward, analysing a real estate rent roll business can be a complex process. There are many factors that will influence the pricing multiple that a buyer is prepared to pay, including:


average annual management income [AAMI]

AAMI is the average income you receive per property, per year. The higher your AAMI, the better it is for you as the owner. It means more cash flowing in, and that may also bump up the rent roll pricing multiple.


portfolio location

Certain areas, like inner-city suburbs and growth regions, are more desirable to buyers. Disparities in price may exist between metropolitan and regional areas, due to fewer regional buyers and different lending criteria from financiers.


geographical distribution

Think about the properties in your portfolio. A concentrated rent roll with properties within close proximity is more cost-effective to manage compared to a scattered one.


property management fees

The fees that the agency charges for property management can definitely impact the price of the rent roll. Higher fees may suggest a more profitable business, while lower fees might indicate a business with less loyal landlords attracted only by lower fees.


multiple property owners

Landlords owning multiple properties can negatively impact a rent roll’s value. Losing one landlord may mean losing multiple rental properties, affecting the overall portfolio.


rent arrears and vacancies

Significant rent arrears or high vacancy rates can diminish a rent roll’s value, posing potential cash flow challenges and increasing workload for the owner.


owner’s involvement and pm staff

It’s important to look at how involved the owner is with their landlords and how stable the property management team is. Knowing the ins and outs of the management structure ensures a smooth handover for the new owner.


other fees and charges

Additional fees paid by landlords, such as letting fees and inspection fees, can impact the overall income. Though not directly part of the pricing formula, they contribute to the annual revenue generated by the rent roll asset.


industry conditions

The state of the real estate market, rental demand, and the broader economy play a role in determining what a buyer is willing to pay for a rent roll.


growth potential

Expanding your business can boost the value of your rent roll. Whether it’s through better marketing, buying more suitable properties, or offering new management services, growth opportunities are key.


comparable sales

Although obtaining comparable sales information is challenging, understanding the market and the lending environment provides a baseline for pricing considerations.


seller’s intention post sale

What the current owners plan to do after selling their business matters a lot. If they’re retiring, a buyer might see less risk and be willing to pay more. But if they’re staying in the game, it could affect how much a buyer is willing to fork out.


For the best outcome, it’s crucial to seek guidance from a seasoned business broker, real estate professional, or financial advisor who specialise in analysing rent rolls. They’ll help you thoroughly evaluate your portfolio and establish a fair price that takes into account all the unique factors of your business.


we’re here to help! 

Considering the above factors, it’s crucial for sellers to mitigate potential risks, and build on the positives, to maximise the sale price of their rent roll. At businessDEPOT, our experienced brokers have expertise in analysing rent rolls and can provide a thorough evaluation of the portfolio, helping you to determine a fair and considered price based on the specific attributes.

To find out how we can assist you, please give Brad Dean a buzz on 0417 886 352 for a confidential discussion.

Alternatively, please feel free to reach out to us at agencybroking@businessdepot.com.au.


general advice disclaimer

The information provided on this website is a brief overview and does not constitute any type of advice. We endeavour to ensure that the information provided is accurate however information may become outdated as legislation, policies, regulations and other considerations constantly change. Individuals must not rely on this information to make a financial, investment or legal decision. Please consult with an appropriate professional before making any decision.


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