If you work in the real estate industry, you’ll know a property exchange usually follows a similar timeline: a few weeks to prepare the home for sale, between two and six weeks of showing the property, negotiation and six weeks to settlement. Generally, this kind of transaction can be completed within three months.
However, the exchange process takes much longer when it comes to rent roll or agency sale. This is because there are several more steps and people involved.
Timeline of a rent roll transaction
If you’re wondering how long a rent roll deal takes, the answer is definitely months rather than weeks.
Phase 1
If your goal is to sell for as much as possible, you may need to spend some time adding to your rent roll or refining the systems you use to manage it before you sell.
From there, as the seller, the first step will involve gathering and editing information, preparing an Information Memorandum and making a marketing plan. With your broker’s help, you will figure out who to target, see who is interested and start negotiations.
It is reasonable to expect it to take several weeks or even months to find an interested buyer. The number of offers you receive will depend on current market conditions, where the properties on your roll are located and the conditions under which you wish to sell. If the market is quiet, you may decide to switch strategy and sell parts of your rent roll to different buyers or sell some PUM and keep the rest.
Phase 2
Once negotiations have started, you’ll need to start working on the ‘Heads of Agreement’ with the help of your broker. This will set out the terms of the contract and confirm exactly how the roll will be valued. When this has been completed, your solicitor will draft the Contract of Sale, based on the information in the Heads of Agreement.
It may take some time to find the right solicitor to help if your existing one doesn’t specialise in this area. Don’t rush through the Heads of Agreement and contract preparation phase and give yourself several weeks for them to be completed.
Read more: What a valuer looks for in a rent roll valuation
Phase 3
From there, expect around 30-45 days of due diligence while your prospective buyer and their team review every detail about your rent roll. During this time, you will be asked to share financial records, client agreements, information about the homes on your rent roll, past performance, growth rates, goodwill and more. If you have done your preparation up front, you can expect this part of the process to run more smoothly. Due diligence is a condition precedent of the contract so make sure the information you present and share reflects what is in the written agreement.
Read more: How to sell a rent roll
Phase 4
The other way a rent roll sale differs from a home sale is finance; your buyer can only seek approval once the contract is agreed on, and there is no option for pre-approval. Waiting for a lender to agree to a loan may add several weeks to your rent roll sale, depending on your buyer’s circumstances.
Retention must be considered as well; the final price will be based on the number of rental property owners who decide to remain with the new agency after a specified period of time has passed. So as the owner of the rent roll, you won’t know exactly how much money will come to you until the end of this period, which can be three months or longer.
How long does it take for a rent roll to sell?
It’s not possible to say exactly how long it will take for a rent roll to sell, but if you have the right support from qualified people, you will find the process smoother and less stressful. The groundwork you put in ahead of the sale can make a big difference, so speak to a broker about your goals and they will help you create a plan to move forward.