Hi Joanna, i've heard the intial purchase of an established rent-role can be quiet high? Can you comment on this?
thanks
Rent rolls are sold based on multiples of management fees earned, not including letting fees, lease prep fees or other charges to landlords.
Back when I first started my business, in Sydney, rent rolls were selling for around $1.50 for every dollar in management fees earned.
These days, again in Sydney, it's not uncommon for rent rolls to be sold around the $4.70 mark. So, an average rent roll of 200 properties, at an average rent of $400 per week and management fees of 5% would generate $208,000 in management fees alone, and would sell for around $977,600.
They're difficult to buy for a few reasons:
1. They don't come up for sale all too much
2. Banks won't lend on the rent rolls themselves as security
3. The vendors tend to be quite picky who they sell them to
4. The larger rent rolls, as you can see, can be quite expensive
hope this helps.