Protect your rent roll’s future and value (not to mention your clients and employees) with these important steps.

Your rent roll helps ensure steady income for your real estate business, so it is important to take care of it and keep it in the best of ‘health’. 

When a rent roll is in good shape in terms of finance, structure and management, it maintains its value and provides a better level of service for property owners and renters. You also give your staff peace of mind about their future with the business because you will be able to give them a more consistent experience. 

Here are three things to do which will mitigate risk for your rent roll and your business. 

1. Ensure compliance

It may take some time but you need to confirm every property on your books is compliant with current renter legislations in your state. 

In Victoria, laws changed in 2021 but many properties haven’t caught up. For example, rental providers must comply with prescribed requirements for keeping and producing records of gas and electrical safety checks conducted at the property. If you decide to sell your rent roll and some properties don’t have these records, you risk the property being valued at $0, which will diminish the overall price of your asset.

By assigning someone to your team to oversee this, you can streamline the process. There are also consultants you can work with who understand tenancy laws inside and out and can take over in this area.  

2. Double check authorities

Agreements between property management agencies and their clients often expire without anyone realising. For one thing, this presents a huge risk because property owners can actually dispute your claim to commission. You can also potentially be fined for breaching the Estate Agents Act. 

Beyond this, out of date agreements can present challenges when the time comes to value and sell a rent roll because they mean the client can leave any time and it may be difficult to enforce the clauses in the contract. In addition to this, a lender involved with a rent roll sale will do its due diligence by confirming authorities are complete and compliant so it may affect a buyer’s ability to make a purchase. 

Ideally, you will have some form of notifications set up so your property managers don’t miss contracts expiring and they can proactively renew agreements with your clients. 

See more: What happens to authorities in a rent roll transaction?

3. Protect your data and intellectual property

When a property manager leaves a business, they should act in an ethical way and not take their clients with them. However, if your employment agreement doesn’t specify this, you may find you lose properties when you lose a property manager, either because property owners follow of their own accord or they are poached by your former employee. 

There is also the risk of your business information and intellectual property being stolen by a departing employee. Imagine your entire contacts list being downloaded to a thumb drive and shared with the competition; it certainly wouldn’t be ideal. 

To ensure you don’t lose clients or data, you need clauses limiting a property manager’s activities after they leave the business. This may include a ‘non compete’ clause which specifically prevents them from taking clients with them or even publicly announcing where they are working after leaving your business. Having the right wording and signatures will remind people not to do the wrong thing and will empower you to take legal action if you need to. 

See more: Employee restraints and the security of your rent roll data 

If you’re planning on selling your rent roll soon or in the future, the more you can do to ensure it is well managed and protected from risk, the better. It will make the due diligence phase of your sale process so much smoother and facilitate a faster transition.