This presentation was given to the REINZ Conference in July of 2015. David Faulkner talks about the future of Property Management and how rent rolls are valued across New Zealand. He also looks at how they compare to Australia
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
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8. 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
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10. 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
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14. 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
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Rent Roll Multipliers
NZ Statistics from John Crocker & Associates 2014 to 2015
Australia Statistics from Macquarie Bank Research 2013
15.
16. 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?
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17. Due Diligence
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• 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?
18. 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?
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19. What will the Bank do
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• 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
20. 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
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22. 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
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23. 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%
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To develop a business that can grow then we must focus on our culture. Without the right people no reliance on technology or flashy marketing will work. Your people are the key to success