When it comes to ascertaining the value of a rent roll, there’s a lot more to it than simply considering the number of properties under management or the average annual management income.
While traditional metrics are important, they need to be analysed in conjunction with a host of qualitative factors that either add to, or detract from, a rent roll’s value.
Factors such as the reputation of the current property manager, the geographic spread of properties, type and quality of properties, and landlord concentration all affect the likely ongoing management cost and risk of managing the rent roll.
However, the rent roll transition period and process should be added to the list of considerations, as it’s often an overlooked factor that can significantly impact the transaction’s current and future value.
A unique value proposition
RentPay offers an additional point of difference for the owners of rent rolls who are preparing or considering selling their rent roll in the future.
The transition of rent rolls can be a notoriously messy endeavour for both the seller and purchaser.
Ultimately, the success and value for a rent roll purchaser lies in retention of the existing portfolio.
Be aware that landlords may use a rent roll sale as an opportunity to shop around for a new property manager and any issues in the transition process will agitate this.
Post-settlement, getting each tenant to amend their rent payment details requires significant effort from the new rent roll owners, with a coordinated communication and outbound campaign over weeks and months.
Tenants are often slow to change payment details, resulting in incorrect payments continuing to the seller and additional reconciliation processes.
This results in them being flagged as ‘in-arrears’ and landlords receiving late payments.
This is where RentPay’s capability to simplify and streamline rental payments, and any subsequent changes, is a game-changer.
On settlement date of the rent roll transaction, all that needs to be done is to provide confirmation to RentPay and we can update the payment details for the entire rent roll.
You don’t need to rely on each tenant to update payment details, the flow of rent continues uninterrupted, and the retention could easily be 100 per cent.
A return on investment
BusinessDEPOT Agency Broking Director, Brad Dean, notes that while many things influence the sale multiple of a rent roll, the improved management efficiency RentPay provides is an attractive factor.
“In a sale transaction, anything that will ease the administrative burden of the transfer process is a good thing and may result in less retention loss, providing greater certainty for the buyer and more realised cash for the seller upon completion,” Brad says.
“Such a carefully planned transition enables the purchaser to take full control of the transition process, which allows them to present themselves professionally to landlords and tenants.”
Rent.com.au Chief Operating Officer, Jan Ferreira, says it’s a win-win scenario for sellers and purchasers.
“In addition to the ‘normal’ pricing factors, it’s now also necessary to add a premium based on how renters pay their rent,” Jan says.
“Not only does RentPay save you time and money while you’re managing the rent roll, it can also deliver extra value when the time comes to sell that rent roll.
“Even if the increase in the multiple is from 3 to 3.1, it’s well worth it and moving your entire rent roll across to use RentPay can be achieved within weeks.”
Book an information session with RentPay.
