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Rent Roll Buying and Selling – More Than Meets the Eye

Rent Roll Buying and Selling – More Than Meets the Eye

By Jo-Anne Oliveri, ireviloution intelligence, Brisbane, Australia

Recently, I have been involved in the sale and purchase of a rent roll. I had the rare opportunity of consulting for both the buyer and purchaser. Let me say, this was the smoothest and least stressful rent roll transfer I have ever witnessed!

Now some might say there is a conflict of interest by consulting to both the seller and the purchaser, and yes, I would agree! I definitely had my reservations about consulting and advising to both of them, but I discussed my dilemma with both parties. They both agreed they would retain me as the consultant and adviser through the negotiation, transfer, settlement, transition and retention period. In fact, I even conducted the inspection and overview on the selling rent-roll, and prepared the due diligence report.

This was a tremendous lesson for all concerned (including me)! The offer and settlement process lasted for several months. The buying agency is now in the midst of the four-month retention period. The selling agency must continue to cooperate to ensure all clients (both property owners and tenants) are happy with the new managing agent. Both agencies must not become complacent or lulled into a false sense of security until they are clear of this retention period.

For all intents and purposes the first goal of the buying agent is retention! The second goal is to build on the managements that they have invested in to encourage the investor to buy more property and recommend their services. That’s how a business owner should focus their attention to build on their investment. Principals need to understand and monitor their ROI (Return on Investment).

The amount invested alone should be kept at the forefront of the mind. The managements that transferred with the rent roll should be tracked with the historical information. Performance should also be logged and recorded. This ensures that not only the investment was solid and worthwhile, but also that future investments in purchasing rent rolls are made with factual historical data.

It’s important to understand the impact the previous purchase had on your business, good or bad – and that is just the financial investment! What about the investment of time, the years the principal has invested in developing, growing, and nurturing their own brand, and their personal and professional reputations?

Too many principals purchase a rent roll and never have any way to track the performance and ROI of the investment. Too many principals that decide to sell their rent roll believe once the contract has been agreed and is unconditional that their job is all over. They believe it’s just a matter of transferring the files over on transfer (settlement) day. Nothing could be further from the truth! Some principals even make sure the new managing agent employs their current team to continue managing the properties. They believe property owners will feel more secure with the management continuity and familiarity, therefore have a greater chance of retention. Once more, nothing could be further from the truth!

So, before you decide on buying a rent roll or selling your rent roll, please ensure you are informed. It’s not just a matter of signing a contract and employing a team. Oh no, there is so much more than meets the eye. More thoughts on this over the next few blogs!

 

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