Where some see hard times, others see opportunity. If your real estate agency has a solid foundation and customer base, you can use the 2020 economic climate to grow. 

The property market is not unlike the stock market - when the prices tumble, there are those who will weep, and there are those who call “SALE TIME!”. Savvy property buyers and investors see a market slowdown as the chance to grab a bargain and boost their portfolio. By making careful choices and biding their time, they will see positive returns. 

The same applies to real estate agencies. An economic downturn, while devastating for some, means opportunity for others. This is especially true if you have a robust business with long-term, dedicated clients and a solid rent roll which brings in enough ‘bread and butter’ to help you coast through dips. 

If you’re a real estate principal who has focused on building a solid foundation for your business, you may find you have the funds to look at growing your rent roll. And with many agencies needing to offload theirs quickly, the COVID-19 crisis means it’s not a bad time to do so. 

There are two kinds of rent roll sale to keep an eye out for: 

Forced sales

Forced sales, while unfortunate, are unlikely to be taking place solely because of the downturn. 

When a real estate agency is forced to sell all or part of their rent roll, it is usually because there have been inherent problems for months or even years. Sadly for them, time is not on their side and they need to sell so they can access cash, pay debts and focus on the areas of their business which are successful. 

If you’re looking to purchase a rent roll as part of a forced sale, don’t forget to do your due diligence. Like a used car, the price may be a clue about the problems ‘under the hood’. Problems may be related to client dissatisfaction over customer service, which is something your agency can hopefully fix quickly. However, if the problems are due to lack of payments or no organisation across accounts and admin, tread carefully. You don’t want to buy problems which could set your agency back financially.

Work closely with a valuer to determine how much to pay and be thorough in your research about the financial value as well as the goodwill towards the current property management team. 

Another element to be aware of before you purchase this type of rent roll is how many tenants have reached out due to being in financial distress and also what position the landlords are in financially. A lot of unpaid bills is a red flag and even if the price is low, you don’t want these properties on your books. 

Like with a property sale by mortgagee, forced sales present the opportunity for a good price. Work with someone who knows how to negotiate if you want to maximise the value of your purchase. 

Considered sales

Considered sales are less urgent. In these circumstances, an agency is looking for cash so they can ride out a slower period. 

With less pressure, there is also less need to price a rent roll extremely low. The selling agency won’t be in a big rush and will have more time on its side to prepare. 

This can be a positive thing if you’re looking to grow your agency with ‘sure thing’ properties and a rent roll which is in good order. Again, do your due diligence and make sure you have an experienced valuer, accountant, lawyer and rent roll broker so you are well informed before making an offer and signing a contract. 

With many home sellers putting their plans on hold for the foreseeable future due to COVID-19, having a strong foundation of property under management will keep your agency in the black. If you have a good team of property managers and a portfolio of quality clients, you can leverage the current circumstances to stay strong and even expand your business.

BDH Solutions are rent-roll agents with over 30 years experience in connecting the right vendor with the right purchaser. To stay up to date with our latest listings, register here.