Don't underestimate the importance of rent rolls: Carlie Ziri

Having built million dollar rent rolls during my career in real estate, I have learned not to underestimate the importance of what is truly the most central asset of any real estate agency.

Historically, our industry has tended to undervalue property management teams, while sales agents have attained all the glory and remuneration.

Over time this dynamic has started to change as more and more principals focus on building their rent roll income. Revenue generated from a rent roll is reoccurring and secure; sales income can be variable and volatile.

A rent roll is a real estate agency’s property management portfolio. It should be well managed and retention should always be a priority as it generates guaranteed income on a monthly basis. If you are lucky enough to have built a decent sized portfolio, you could have a very valuable asset.

The rent roll is also a source of sales listings for the sales team so the overall income regenerated from property management is priceless to a real estate agency.

It is also the only part of the business that a bank will recognise and lend money against as an asset.

When a real estate agency is valued, regardless of how large your sales team is, or how many sales you are turning over each year; the value of your rent roll is between 80–90% of your entire business value.

A rent roll is normally valued between $2.50–$3.50 for every dollar generated in management fees per annum. This value depends on many things including (but not limited to) the condition of the rent roll, location and geographic spread of the properties, average rental value, management fee per annum and vacancy rates.

Managing and retaining a rent roll is a very challenging role; you have to meet the demands of your tenants, landlords, internal stakeholders and other external third parties. It is your responsibility to ensure the properties are maintained beautifully, your tenants are living happily and that your landlords’ income is being paid on time and maximised with minimal vacancy.

Only time will tell what impact the new Liberal government will have on consumer confidence and on property sale prices. Currently, the rental market is going from strength to strength – another key reason why the rent roll should be a key area of focus for an agency.