Lifestyle Guide Sydney - The Importance of a Rent Roll

Having built four separate million-dollar rent rolls during my real estate career, I know only too well the importance of a property management portfolio (rent roll), and how it’s a huge advantage to any real estate agency.

Many people underestimate the value of an amazing property management team. Too often these champions are unsung within the industry, as sales agents attain all the glory and remuneration.

Fortunately, more and more Principals are recognising the value of a rent roll, weighing fickle sales incomes up against the re-occurring and more secure rent roll revenue model.

The rent roll of any agency generates guaranteed monthly income, and the bigger the portfolio, the bigger the income. If an agency builds a decent-sized portfolio, they could have a very valuable asset on their hands.

With this knowledge spreading, there seems to be a renewed focus on building these profitable rent rolls, and a strong desire to ensure portfolios are effectively managed – with retention as a priority. It’s also the only part of the business that a bank will recognise and lend money against as an asset.

When a real estate agency is valued, regardless of sales, the value of the rent roll is between 80-90% of the entire business value. A rent roll is normally valued between $2.75 – $3.75 for every dollar generated from management fees per annum. Values are dependent on a number of things including the condition of the rent roll; property locations; average rental value and management fee per annum; vacancy rates; and other income generated.

Managing and retaining a rent roll does have its challenges to keep in mind. There are the demands of the tenants, landlords, and many other related parties. There is the responsibility to ensure the properties
are maintained beautifully, that tenants are living happily, that the landlord’s income is being maximised with minimal vacancy, and that rent is being paid on time.

More and more Principals are recognising the value of a rent roll.

For many years property management was underestimated and not valued by business owners, but it should essentially be the core of any property agency and be nurtured accordingly.

At The Lifestyle Property Agency we love our property portfolio and manage it like the treasure that it is. We invite you to get in touch for a chat to see if we can help you maximise and nurture your returns.

Carlie Ziri
Director – Lifestyle Property Agency