liverpoolharryk said:
Agreed Ed,
The value here in Queensland is around $1.80 to $2.40 per dollar of commission that the property brings in. There are many varying factors to the value of a Rent Roll, but yes it is the only real asset of a Real Estate Office.
Jarrod
Jarrod Lane Real Estate
Until recent times this has been the case but not now. A rent roll is probably the most valuable asset of the business but real values are being placed on other areas such as Systems and procedures, Database, Home loans, profitability, position and more.
An agency with clear Systems including Job descriptions for staff, written procedures for all daily tasks, company vision and structures are now a valuable and definable asset to any business including RE and are genuinely worthwhile in Goodwill. A quality database which has a communication structure with contact trails and set programme to maintain a high percentage of repeat and referral business ( Top 8% of RE agencies have a 66% repeat/referral rate) is also attracting a high goodwill factor.
Home Loans are also now on a par with Rent Rolls. An agency can work with a broker or bank and receive upfront commissions plus trails for referring customers. This too can be borrowed against and increases the value of the business.
Mr Ed - You make a very valuable point. It is important for a PM to understand the real value of a LL. Looking after your valuable LL's is also a good reason to get rid of the one's who are a pain in the backside. If an agency fails to have a complete systems manual in place including all procedures you can bet they haven't trained their staff correctly.
Just this year I have implemented the latest version of our Systems and procedures manual, a scripts and dialogue manual, Induction programme for all new staff, training manual, a training room complete with cd player, video player, DVD player, projector, TV, network cable etc etc, latest version of our Asset management proposal and much more.
All businesses, and especially RE, now only have 2 choices, very small or grow big. Taking the option of middle ground means working for wages at best and a quick road to potential ruin. For every business we are no longer just competing with the other local business who does the same thing down the road. Our competition is big business such as Virgin, Westfield, Ritz Carlton and any other company committed to the greatest service possible. Our customers use these people also and when they are treated like royalty by one company they rightly expect it all the time and judge smaller businesses accordingly.
As for the value of rent rolls, they have increased substantially in recent times and are valued around $2.40 - 2.70 for suburban offices and around $3.00 for inner city per dollar revenue. These are Brisbane values and depend on many issues including average rental price, average commission charged, systems in place, quality of properties and other matters. Valuers do look for an average comm above 8% in Brisbane before considering it of high value. Having the correct support in place plus long term viability is also important. Charging clients for ongoing services and external matters such as advertising, tribunals, letting new tenants is vital for an agencies profitability and increased value.
Not sure about anyone else but I work to get paid and would rather not be one of the people cueing up at the moment going broke or selling up before they do. Actually, I'm the one lining up to buy them, thats how I just found out lots of this info
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Kev
www.nundahrealestate.com.au
