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New factors affecting rent roll sales

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New factors to consider that are affecting rent roll sales

50% of the rent roll sales I have overseen this past 6 months have seen varied “new terms” that historically I have not seen. What are these new terms?

The terms I am referring to relate to smoke alarm compliance and insulation predominately. The contracts being entered into have been varied and in each instance has been dramatically different where expectations levels have been. The variance range has seen some buyers requiring absolutely nothing during due diligence and at settlement all the way through to requiring varied lists documenting or confirming what action has taken place and what is outstanding. These 2 items themselves differ in as much that legislation has come to pass (smoke alarms) whilst the other (insulation) has legislation that is in place with a deadline date being July 2019.

Varied buyer terms have meant buyers requiring

– Nothing at all or

– Detailed lists affirming the status or

– Discounting on capital being paid if certain properties status is not adequate

So what does this mean for you as a business owner or as a buyer of a rent roll? Certainly, you should have the status of properties up to date where required/per legislative requirements. And when selling your rent roll, what it means is that whatever terms you agree to should be thought through in terms of what resources are required to complete terms agreed to, together with potential capital value loss if it is not.

Historically, retention, deposits and restraint of trade have been some of the primary terms seen in the sale of a rent roll. I believe based on the number of acquisitions I am seeing with these “newer terms” that legislative requirements are very much going to become a primary term consideration in addition to these more historical terms that we tend to expect on the sale or acquisition of a rent roll.

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About the author

Hamish has over 17 years of experience within the property management industry and has experience throughout New Zealand and Australia as a manager, principal and consultant. He utilised all of this experience to form a property management business that he expanded between 2009 and 2016 into 7 locations around New Zealand.

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Rent roll growth tip: Just listed flyers

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Rent roll growth tip: Just listed flyers

One of the means we could use to inform people about rental properties is by using flyers. The importance of letting the neighbourhood know that your office has taken on the management of a property is massive – especially if the property was being under-managed. Neighbours will approach you and let you know of previous issues that there have been with the property. This also opens up the opportunity if they know any other people who could be disappointed with their current agent. Let’s not forget to be asking for new business at the same time. It’s about creating every chance we can to ask for new business, they too may have an investment, and they are now seeing you be proactive. We have come up with some just listed and just leased flyer templates that you can use when announcing the properties.

Just Listed Flyer Template

{Office name} has just listed 52 ABC Street, do you know anyone looking to move, or would you like to know how much you could get for renting out your home? Call {Business Development Manager Name} for a free, fast, effective and up-to-date rental opinion of your home. It will only take 15 minutes of your time.

Just Leased Flyer Template

{Office name} just leased 52 ABC Street. If you would like a free updated rental opinion of your investment, call {Business Development Manager Name} – it will only take 15 minutes of your time. {Phone number, name and offer.} (Great spot to dangle a good offer in here too e.g. could be any property listed in June receives free professional photography.)

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rueben skipper

About the author

Rueben is a consultant at Hamish Turner & Associates. He is an entrepreneur with 20 years of business experience in a number of sectors. In the past decade, Rueben has worked in a handful of technology startups (e.g. Timely) in the area of digital sales and marketing. In addition, he has run a social media marketing agency since 2013 providing social media services and digital marketing services to small businesses across NZ.

You can check out more about his background and follow his VLOG on his Linkedin profile.

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Restraint of Trade

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Restraint of trade

Restraint of trade is a common term used within a sale and purchase of a rent roll.

Restraint generally varies between 2-3 years, however, it is not usual to see a 5-year term if the business being sold is of a strong size and/or broad spread in location. A restraint of trade distance is pretty varied. Anything from a 10-25 km range is common. 

What is commonly requested with a restraint of trade and unable to be granted when buying a rent roll is a restraint of trade against the employee’s of the business being sold ie; the property management and administration staff. This is a significant point as the risk on attrition can be mitigated substantially if the property management staff imparticular are transitioned with the rent roll itself. One way around this is to buy the company as a going concern as it is common for employers to have the restraint of trade clauses in their employee’s job descriptions. 

Restraint of trade on the acquisition of a rent roll is both common and very important, so if you are not sure about this aspect of a sale seek advice from your legal representative or indeed pick up the phone and give me a call or send me an e-mail.

Kick off 2020 with a
Financial Health Check of your rent roll

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About the author

Hamish has over 17 years of experience within the property management industry and has experience throughout New Zealand and Australia as a manager, principal and consultant. He utilised all of this experience to form a property management business that he expanded between 2009 and 2016 into 7 locations around New Zealand.

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Remember the prospect for business outside your sales team

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Remember the prospect for business outside your sales team

There are so many ways that Business Development Managers can get leads and grow a rent roll without involving the sales team for listings. Now, I’m not saying we don’t need them, because we do, but the question being asked is how can we lead generate without using the sales within an office?

A simple resolution is to catch the leads from another angle by which investors come to you. Sometimes they purchase through a rival agent and don’t want to give the selling agent the management. What about the investors who build their investment? There are companies and builders that are only dealing with investors and selling land and house packages – investor-only stock.

But there’s more. There are display villages, where builders employ staff to sit in a property they have built so they can convince/sell people a house package. In some cases they also sell land and house packages, sometimes it’s just the build. Who are they referring investors too, or are they at all? A simple rule for a listing agent is to develop a relationship with Sales at display villages.

Kick off 2020 with a
Financial Health Check of your rent roll

Click here

About the author

Hamish has over 17 years of experience within the property management industry and has experience throughout New Zealand and Australia as a manager, principal and consultant. He utilised all of this experience to form a property management business that he expanded between 2009 and 2016 into 7 locations around New Zealand.

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Subscribe to our monthly newsletter and be the first to get updates on our rent rolls for sale and property management news.


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The Hidden Asset In Your Business

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Have you ever thought to borrow against the value of your rent roll asset?  It’s entirely plausible for you to do so as your rent roll has a market value and for the high majority of rent rolls around the country, they hold no little to no debt.

Some smart tax advantageous options around borrowing funds against your rent roll asset include purchasing a rent roll itself to aid with the growth of your business.  Perhaps you would like to invest in a larger or more centralised commercial building for your business. Or simply use the capital value to leverage against to secure an investment, ie; a rental property.

Depending on the relationship you have with your bank and their knowledge around the valuing methodology of a rent roll you can simply discuss your borrowing options directly with them.  Alternatively, send me an e-mail and I will be able to provide you an example of the accredited valuations we provide our clients.

Stand firm on your fees

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Stand firm on your fees

Property managers are too easily scared when confronted with prospective clients asking for a discount. A majority of property managers are still unsure and uncomfortable about defending their fees.

“I will admit, when I was a Business Development Manager, in the early days, I would be going through an agreement and saying it as quickly as I could so they wouldn’t ask me for a discount.”

“Once I knew I had the confidence in the team behind me and I knew we were a good office and we were providing good services that were better than every other agency, I could defend my fees and say, “This is why we are better and this is why you pay X-amount of dollars a year.”

“If you are renting properties five or six days quicker than everybody else, you are potentially saving $300-$400 a year just on filling properties quicker, which is cheaper than a one per cent discount over the year,” he added.

The main reason PMs reduce their fees is fear of confrontation.

“Agents reduce their fees because they don’t know how to defend their fees. It is easier just to say ‘okay’ to get their signature than to say, ‘Well, no, this is what you get if you sign with us and this is why our fees are this price,’” he said.

It is natural and human to be scared of it. A PM commission is not like a bank percentage, which is what most owners think.

Whether it is eight per cent or nine per cent, it is not a bank percentage. We are talking about three or four dollars a week. Break it down to a daily figure if you have to.