Maybe you’re considering a sale, now or sometime in the future. Or you might just want a check on the growth of your retirement asset. Either way, I’m always happy to help with an appraisal of your rent roll.
But please be cautious estimating your price by just applying a “typical” multiple to your management fees. There’s a large number of factors relating to your rent roll’s risks, potential profitability and ease of operation, that determine that multiple!
Here’s some of what I assess:
- This is a business asset we’re selling so at its core it needs to deliver a strong cashflow. So a higher Average Annual Management Income (AAMI) means greater potential profit as all properties have a minimum operational overhead.
- How much extra is earned through letting, admin, advertising and other fees? Higher multiples are often achieved when this exceeds 20% of management fees – this can be where a rent roll’s true profits are made.
- Geographic spread of the properties: the proximity of each to the office and each other means less travel time/cost to service, plus the agency’s sales team will convert more of these selling landlords.
- What type of properties do you manage? Houses, apartments? Commercial properties along with holiday letting and rooming accomm do sell at lower multiples.
- Buyers want clarity around landlord retention risks. What’s the history of the portfolio? What will the seller will be doing after the sale? Genuine retirement naturally achieves a premium.
- Divide your number of properties under management by the total number of landlords. Do you have one landlord with a big portfolio? There is greater risk around losses where there are fewer landlords and the banks’ valuers will watch this ratio.
And of course your immediate local market’s supply and demand has a huge impact on the final price. There’s a number of areas across Queensland right now with aggressive expansion amongst agents and they’ll compete hard for rent rolls.
There’s more to my appraisal assessment list but the above might give you some insight into how we calculate a rent roll price. And if you are looking to a sale in the future, there’s some valuable ideas I can share on maximising your final result!
If you’d like a confidential chat about your rent roll, or a complimentary appraisal, I’d love to help. I’m on 0423 332 022 or rob@honeycombe.com.au