A Buyer usually can leverage their existing infrastructure without adding huge expenses to their business. The income generated from buying a rent roll of 150 properties far exceeds the extra associated costs. These could be;
- Small upgrade to the computer system or trust
accounting package
- Additional fixed office costs including desks,
electricity, office space, rent etc.
- No additional staff or perhaps employing an
administration person to assist the Property Manager.
- Additional sales income generated from the “new
rent roll”.
- No additional procedural systems.
However, not all rent rolls
may be a great investment. Care must be taken that the purchase will not cause
deterioration of the existing rent roll due to poor management of the rent roll
purchased.
Taking on rent roll of any
size is going to require more work, however if you need to spend 80% of the
staff’s time on 20% of the rent roll to “bed it down” then it is a recipe for
disaster.
A structured due diligence
process can reduce the potential for loss of property and allow for the program
of changes and improvements to be implemented by the team at settlement.
In short you can use the settlement period to
be proactive about reviewing the files regarding the following items to ensure
they are in order;
- Current lease status
- Rent increases
- Bond lodgements register
- Keys
- General or routine inspections
- Outstanding maintenance
- Property & client familiarisation
- Arrears or part payments
- Financial reporting to owners
Taking a proactive approach
through thorough research and due diligence can protect the income stream of
the rent roll you purchased. Needless to say it also builds goodwill with your
new clients.
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