When purchasing a rent roll, a buyer should take into consideration:
- Their borrowing capacity.
- The employment of staff in their agency and their capacity to handle more managements.
- Can a new additional of a rent roll be absorbed into the current business or will their rent roll department need to growth – factoring in additional expenses and management issues.
- The statistics of the rent roll being purchased:
- Is it in the same demographics of the current rent roll?
- Is the average weekly rent like their current portfolio? Will it reduce the buyers overall weekly rent, or will it enhance it?
- Is the average commission low or high or like the buyers rent roll?
- What is the current vacancy rate?
- What is the current arrears rate?
- What is the property to landlord ratio? Is it high?
- Purchasing Costs. The buyer should make enquiries and understand that there are costs involved to purchase a rent roll this includes:
- Finance Costs
- Accountancy Costs
- Solicitor Costs
- Valuation Expenses
- Rent Roll Due Diligence Expenses
All these factors above should be considered before purchasing a rent roll.
Written by Tarsi Hynes, Director of The Tarsi Way