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Rent Roll Brokerage REINZ 2015

Rent Roll Acquisition
 History and future predictions
 Organic v Acquisition
 Appraising a rent roll
 How we decide on multipliers
 Due Diligence
 Dealing with banks
 Clauses
 What happens after settlement
www.johncrocker.co.nz 3

1. Property management de-regulated
2. Letting fee’s could be charged
3. GFC impact has major implications on sales

Acquisition pros v cons
Benefits
• Immediate cash flow and growth
to your business
• Can remove a competitor from the
market place
• Increase to your database
• Sales team can leverage off
increase in rent roll
• Often they can be poorly run, easy
to add value to business
Flaws
• Inheriting problems
• Large capital expense
• Can be issues integrating rent roll
into your software
• Staff, do you inherit them and do
they fit your culture

How do value a rent roll?
 Demand for rent rolls
 Comparative sales
 At least six month trading history
 Breakdown of fees
 Number of properties
 Occupancy
 Owner to Property ratio
 Arrears
 Geographical spread of properties
 Actual revenue v Potential revenue

Example
www.johncrocker.co.nz 11What is Actual v Potential

Multipliers

Location:
New Zealand
Multiplier Location:
Australia
Multiplier
Auckland 2.2 to 2.8 Sydney 3.2 to 4
Christchurch 2.1 to 2.6 Melbourne 2.8 to 3.5
Wellington 2.0 to 2.5 Brisbane 2 to 3
Larger cities 2.0 to 2.5 South Australia 2.8 to 3.1
Regional town 1.5 to 2.0 Perth 2.35 to 2.95
Rural town 1.3 to 1.6 Central Coast 2.5 to 2.85
Rent Roll Multipliers
NZ Statistics from John Crocker & Associates 2014 to 2015
Australia Statistics from Macquarie Bank Research 2013

Due Diligence
 Are all management authorities correct?
 Do they have the assignment clause?
 What is the owner to property ratio like?
 Does the vendor own any units?
 Are any units on the market for sale?
 Are bonds held for each property?

Due Diligence
• Has the Trust account been audited?
• Are there any pending tribunal cases?
• What is happening with outstanding debts?
• Are all inspections up to date?
• Are any letting fees being paid off?
• What is the balance of the Suspense Account?

Due Diligence
 Are contractors owed money?
 What is spent in maintenance?
 Do they SLA in place?
 Are they insured and qualified?
 Are their outstanding maintenance issues?
 What impact with this have on you?

What will the Bank do
• Bank will lend up to 60% based on certain
criteria on unsecured
• Your ability to run the business
• Your ability to service the loan
• Consideration of the quality of the rent roll
and it’s recent performance
• For further information contact Aakash Sarin
aakash.sarin@anz.com

The Purchase Process
 Pay Deposit usual 10% of price
 Pay on settlement; E.g. 70% of price
 Retention period; Can be between 1 to 6 months

What terms should I use
 Employees
 Apportionment of fees at settlement
 Vendor Assistance
 Restraint of trade
 What is the retention payment and period
 Details of documentation to be handed over on settlement
 Due Diligence period
 Websites

Post Sale
 Immediate communication with owners critical
 Have a joint communication plan
 Owners do not like change
 Ensure that you can add value
 Find out owner expectations
 Landlord function
 Retention should be in excess of 90%

Do your research
 Seek advice
 Speak to your lawyer
 Accountant
 Bank

Thank you
david@johncrocker.co.nz

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Rent Roll Brokerage REINZ 2015

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Editor's Notes