While there’s a buzz of activity around selling rent rolls, it is a competitive market, and buyers are looking for the best deal. So, after a strong AAMI, what exactly are they after? In this blog, I’ll give you a snapshot of what buyers are talking to us about, and what makes their wish-list when considering a high-quality rent roll within the marketplace. 

 

1. current authorities

Ensure your Form 6s are compliant and reflect the current agreement with the landlord [e.g. current commission and fees charged]. Many financiers will not provide loans for properties without a compliant Form 6, so this is a critical step before going to market.  

Consider having an external consultant conduct a pre-sale assessment of your agreements to ensure compliance. This small investment relative to the value of your rent roll may make a material difference to the progress of the transaction. 

For more on rent roll transactions, download our free legal guide here.

 

2. quality staff

Buyers with growing rent rolls need quality staff. If you’re putting your rent roll up for sale, the team who come along with it will be viewed as a key criteria. These are the people who’ve built relationships with your landlords, and what buyers are looking for is to keep those connections going. It’s a win-win for you as a seller, as it helps during the retention period.  

 

3. location

Location of properties is another significant factor. Some rent rolls are spread out far and wide, but generally buyers are looking for rent rolls with a tighter geographic spread. This makes servicing the properties more efficient by reducing time that’s lost when driving to property inspections, meaning a lower cost to service. 

 

4. landlord-to-property ratio

The landlord-to-property ratio is something buyers are looking at. As your rent roll grows, you’ll often find landlords own multiple properties. While some level of multiple ownership is expected, buyers are aware of the potential risks of losing landlords with high numbers of multiple properties and may seek extra retention or also offer a lower multiple for these properties. 

 

5. strong management fees

Buyers look for management fees that are appropriate for the area and well-structured. They want to avoid discounted management fees, as this may indicate that landlords are only staying for the price and are at risk of loss should the new owner try to increase rates down the track. 

 

6. lower arrears and vacancies

Buyers are not interested in rent rolls with high tenant arrears or vacancies. Buyers are alert to these red flags and want to see that you have good management systems in place to manage these issues. In severe cases, buyers may even refuse to buy [or buy at a reduced multiple] impacted properties. 

 

7. quality properties

Buyers avoid properties with high maintenance issues or those requiring frequent repairs. They look for landlords willing to reinvest in property maintenance, which should assist in reducing direct management time over the years. Having quality management systems in place is very attractive to buyers. 

 

8. property for sale

If you have a lot of properties currently for sale, buyers can become jittery as the rent roll can diminish quickly after the retention period. This needs to be managed carefully. 

 

we’re here to help 

There’s a lot to consider when putting your agency or rent roll on the market. Buyers are looking at all these factors and more. For a confidential discussion about your business, or to understand more about the current state of the market, please do not hesitate to contact me on 0417 886 352 or email b.dean@businessdepot.com.au. 

 

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