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Getting over the black spots

October 2020

It can be so frustrating when working to build a rent roll when you seem to hit a plateau, growth stops, and no matter what you do, you seem to hover around the same number of properties. I have seen this happen where an agency doesn't grow sometimes for years above a certain number of properties under management. I call this a "Black Spot". So how do you get over these Black Spots in building your rent roll?

If you are content to just continue at that level, that’s fine, after all, some people don't want to grow their rent roll, they are happy with a set number of properties that they can comfortably manage, and that's fine. However, if you are a principal who is really keen on building your rent roll, and developing it, so you can take advantage of the economy of scale that comes from having a larger rent roll, then you need to be able to do something about it. So, let’s have a look at a couple of ideas. 

I think the first thing we need to do is look at is marketing. What are we doing? Is it being effective? Look at where are you spending your money. Is it dead money, or is it actually producing results for you? We need to make sure that every dollar we spend on marketing produces a result. If it's not, then stop it and look for something else. 

Maybe you're at the stage where you can put on a business development manager, and have someone working at marketing and developing your rent roll for you on an ongoing basis. This can be a great benefit to if you you're in this position to be able to afford to employ a competent BDM.

The area that does give you the biggest and best growth of course is buying a rent roll. You have the instant economy of scale jump, because you get a cash flow advantage straight away. You can merge it into your organization and get the benefits from day one. However, there are some important issues you need to look at. 

  • Does the rent roll you're looking to buy fit with your culture in your organization?
  • Does it, or can it be merged while still giving you the ability to not increase staff, or if you have to increase staff what effect will it have on the cash flow? 
  • Is the financing you require to buy the rent roll going to have a negative impact on your cash flow, and can you afford to service the loan comfortably? 

These are all issues you need to be able to work through, and so we recommend that you take a very careful step in this direction making sure you do your due diligence. Make sure that your rental agency is purchasing something which fits with what you already have. Most importantly of all, it's always wise to have a rent roll broker on hand who can help you through the complex process. To take out all the personal conflicts that will arise when you're dealing with individual people, and of course we enable the transaction to be processed properly, with discretion and confidentiality, which you won't get if you're dealing directly with another principal, so just some thoughts for you today.

We trust that you’ve found these points helpful and if you have any questions, please feel free to give me a call at The Rent Roll Broker.

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