Rent Roll Brokerage REINZ 2015

Rent Roll Acquisitions

www.johncrocker.co.nz 3

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


1. Property management de-regulated

2. Letting fee’s could be charged

3. GFC impact has major implications on sales


Acquisition pros v consBenefits• 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

What 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 MultipliersNZ Statistics from John Crocker & Associates 2014 to 2015Australia 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 [email protected]

mailto:[email protected]


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

[email protected]

mailto:[email protected]

Rent Roll Brokerage REINZ 2015

Real Estate

Transcript of Rent Roll Brokerage REINZ 2015