Analysis of the commission rates of a rent roll

Most trust management system will provide a potential purchaser of a rent roll with a management statistics report.

Generally this will show the statistical information of the portfolio or the rent roll, such an average rent, gross fees, letting fees, number of properties managed, number of landlord, arrears etc. It is important for a potential purchaser however, to obtain the actual commission rate charged for each property managed to review whether there is a variation in the rent commission charged across the rent roll.

The value of the rent roll is in part based on the commission charged. That said, you don’t want to purchase a rent roll where they are a number of fees charged at 4or 5%. It is too hard to increase the commission rate to 6-8% as owners will resist this increase. Therefore higher the commission the higher the multiplier a buyer will pay.

If you own a rent roll, start the process to increase your commission rate over time.