It’s a question that every Principal and their BDM must deal with at some point: is your business best served by growing a rent roll organically, or by purchasing a rent roll? There’s no one simple answer to this conundrum, as every business will have its own unique risks and opportunities – making the purchase of a rent roll a simple decision from some Principals, and an impossibility for others. In today’s brief blog, hastings+co puts forward the main pros and cons of going either way. To buy or not to buy … that is the question.
As a team of seasoned trust accountants, hastings + co have seen it all when it comes to rent rolls – the good, the bad and the ugly. Of course, Rome wasn’t built in a day … and neither is a good or poor-quality rental portfolio. No matter how you go about building your rent roll asset, it is ultimately its maintenance which guarantees a steady return on investment for your business. And your method of rent-roll growth implementation requires considered strategy from the get go. So, tidy up your systems and processes internally before you begin organically building a rent roll, or acquiring one from another agency. If you’re needing a rent roll and database ‘health check’ to iron out systematic issues before your new properties arrive, we can help you prepare your business for the happy influx of clients.
Aquiring A Rent Roll
Agencies will often consider purchasing a rent roll if their own property department’s organic growth is slow. A benefit of acquisition is an immediate improvement in your cashflow, along with the potential to grow your income stream by increasing the acquired properties’ rental returns and offering additional services for which you can charge further fees. A natural byproduct of a larger rent roll is a greater sense of brand awareness in your community – with more of your agency’s ‘for lease’ boards hopefully leading to more ‘for sale’ boards!
When purchasing a rent roll, you’ll need to be mindful that fees across the portfolio can be inconsistent and there’s no guarantee that there will be any regular additional charges to landlords for special services. Your rent roll can potentially reduce by ‘bleeding’ clients who have an affinity to their previous property manager rather than your own business. When buying a rent roll, you’ll also have the incurred debt of the initial purchase to contend with – and some rent rolls can take considerable time to deliver a return on investment. Most importantly, not all rent rolls are good investments. Have a professional oversee the process of acquisition and subsequent implementation to future-proof your purchase as much as possible.
Organically Building A Rent Roll
Building your own rent roll is less costly in the immediate sense than acquiring an asset. What you make up in money however, you lose in time – as building a rent roll organically requires patience, strategy and an investment in marketing your business to new clients. There are many pros to building your own asset – most notably, building an asset in accordance with your own fees and expectations. When purchasing a rent roll, you may acquire less-than-desirable clients which are costly in time and put additional stress on your staff – whereas building organically means you are naturally more selective with the business you take on. Another benefit of ‘growing your own’ is the slow, managed growth which leads to stronger retention levels of landlords.
There’s no one way to grow your rent roll – acquisition or organically building your rent roll are both options. Take your financial position and your growth strategy into consideration, and you’ll be one step closer to that golden rent roll you’ve long dreamed of calling your very own.
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