If you are a real estate agency owner considering selling your rent roll, now is an excellent time. 

While seasoned real estate professionals are used to the market rising and falling, you can’t deny Australia is in a peak at the moment, with average house prices tipped to rise by 15 per cent in 2021. 

As well as it being a seller’s market for homes and apartments in well-developed areas, it is a great time to prepare and sell your rent roll. 

Why sell your rent roll?

When property sales are strong, agencies are, of course, making more money. They may choose to use the extra cash to grow their rent roll and secure their ‘bread and butter’ income to help them get through the inevitable hard times. 

There are plenty of reasons to sell your rent roll, even though they are in demand. You may decide as an agency to focus on a specific area and have properties outside of it which you no longer wish to travel to. You could be downsizing to become more streamlined, looking to free up collateral or preparing for retirement and ready to tap into the financial rewards of all your hard work. 

As a real estate professional, you know better than anyone how it makes sense to take advantage of a hot market and sell while interest is at its peak. 

How to prepare your rent roll for sale

There are several things to do before you list your rent roll for sale. 

Firstly, it needs to be well organised and in order from an administrative point of view. Do a review of your current properties to check if contracts are up to date and minimise overdue accounts. 

Ideally, your team will be working well together and have efficient processes in place to optimise productivity and results. Having excellent property manager retention demonstrates the quality of your rent roll as a product and can help to make it more appealing to a buyer who would consider taking on staff as part of their purchase. 

You also need to determine the value of your rent roll by proving its past income and sharing its potential future income. Engaging an experienced rent roll valuer will ensure your valuation is executed thoroughly and fairly. It is also recommended to seek professional financial and tax advice at the same time so you have all the information you will need to make the right decisions during the transaction.

There needs to be an agreement between the two parties (vendor and buyer)  as to how the value is determined. Make sure everyone is working to the same ‘formula’ or you may end up with vastly different figures. 

Be open to negotiate on elements including price, condition of sale, intellectual property and handover dates. Remember you may have some property owners drop out as part of the transition and factor this into the contract of sale. 

This is a business sale, not a property sale so be prepared for the transaction to take time and involve a lot of detail. 

Sell your rent roll in 2021

If you want to capitalise on a seller’s market and sell your rent roll, work with a broker who specialises in this area of business sales and has represented hundreds of real estate agencies from Melbourne and beyond. 

A broker will share their experienced advice, let you know what to expect and help you get the right price for your rent roll so you can make your next moves with confidence. 

BDH Solutions are rent-roll agents with over 40 years experience in connecting the right vendor with the right purchaser. Download our information booklet on the new Victorian Minimum Living Standards Legislation