What drives the value of a rent roll?

How do value drivers work for a rent roll?

Each driver acts through one of four channels: income (how much the roll earns now), durability (how long the managements are likely to stay), servicing cost (what it takes in staff, systems and travel to look after them) and evidence (whether the income, the agreements and the records can be verified).

A driver can pull two ways at once. A high fee rate lifts income, but if it sits well above what local landlords will tolerate, it can shorten how long they stay. A block of managements from one investor can be cheap to service and still carry the risk of all of them leaving together. A valuation weighs each driver through the channel it actually acts on, rather than adding up positives and negatives.

Which drivers move rent roll value, and in which direction?

The table sets out the usual direction of each driver. It is a guide to judgement, not a scoring system.

What makes rent roll income last?

Attrition is the steady loss of managements every roll experiences, plus any extra loss around a change of owner. Its pattern matters more than a single figure: losses that are low, explained and spread across many landlords point to durable income, while losses clustered after a staff departure or fee change do not. Measure losses by income as well as by count, because a few high-rent managements can cost more than many small ones.

Managed properties listed for sale are the most predictable losses. Concentration in one investor, developer or related party can remove many managements with one decision, and related-party managements may sit on concessional fees. Tenure helps: landlords who have stayed through fee reviews and staff changes are more settled than recent wins or managements bought from another agency.

What makes a roll cheaper or dearer to service?

Geography sets travel time: inspections and changeovers across widely spread suburbs take more hours per management. Property type sets workload: older houses need more maintenance coordination, strata units add owners corporation dealings, and short-stay managements turn over far more often. High tenancy turnover earns letting fees but adds leasing work and vacancy.

Staff capacity is usually tracked as managements per property manager. A roll run by stretched staff shows a low cost today and a high risk tomorrow, because when a property manager leaves, replacement cost and departing landlords can arrive together. A buyer with spare capacity may value a roll more highly, but that is value to that buyer rather than market value.

Why do agreements and trust records matter if they add no income?

Because they decide whether the income can be relied on. In NSW an agent is not entitled to be paid for its services, or to recover expenses, without a signed written agency agreement that meets the requirements, served on the client within 48 hours after the client signs. In Queensland an agent cannot provide a property agent service until appointed by a written agreement, and Victoria requires a trust account for client money such as rent.

Trust accounting is checked too. In NSW, licensees who received or held trust money must have their trust accounts audited for each audit period ending 30 June, with the audit submitted by 30 September. Clean audits and reconciled ledgers remove reasons for a buyer to discount the price or delay settlement.

Can two rolls with the same income be worth different amounts?

Yes, and often by a wide margin. Illustration only, not a market multiple: both hypothetical rolls below earn the same recurring income. Roll B is worth less, because more of its income is likely to leave, one landlord can take a large block, and until its records are verified a buyer will allow for more risk. The multiple a buyer applies to each would differ, which is why a multiple quoted without the roll behind it tells you little.

What do we need from you?

These records let a valuer measure each driver rather than assume it.

• ·A rent roll schedule at the valuation date, with fee rate and rent for each management
• ·Twelve to twenty-four months of fee income by fee type, excluding GST
• ·A monthly gains and losses record with reasons
• ·Managements and income for your largest landlords, and any related-party managements
• ·Arrears and vacancy reports over time
• ·Which property manager looks after which landlords
• ·Recent trust account audit reports and a sample of signed agreements

What does a rent roll valuation cost?

Every valuation is a fixed fee, agreed in writing before work starts, and it does not change with the value concluded. The band is set by the annual revenue, excluding GST, of what is being valued: for a rent roll on its own, the roll's annual management income; for a whole agency, or shares or units in it, the agency's total annual turnover. Exactly $3 million is Medium; exactly $10 million is Large.

Add-ons are $495 per retrospective (past) valuation date and $795 per additional entity. Delivery time starts once payment and all required information have been received.