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?
Black Spots happen at varying times in most agencies and can be very frustrating; identifying the cause can be even more frustrating so I want us to look at some of the reasons and how to overcome them.
I believe that a lot of Black Spots are psychological or intentional where the agency principal knowingly or unknowingly feels uncomfortable with the thought of managing more properties than they already have. For some, it is a case of that is all they want to manage and it becomes a business or personal choice, which is fine. After all, big is not always what everyone wants.
Property Management is one of those few businesses that reacts very favourably to “economy of scale,” in other words the more managements you have, the larger the ratio of profit should be. (Provided best practice standards are achieved) The good news is that there are things that you can do to over come these Black Spots and grow your rent roll.
The first is to plan for natural growth through aggressive marketing, maybe appointing a BDM, or working with local developers to sell their developments to property investors. But, please don’t grow by discounting fees, it is a false economy.
The second plan is to purchase a suitable rent roll or merge with another agency to create growth and economy of scale. Notice I said ‘suitable” as not all rent rolls are what they seem, and the rent roll must be compatible regarding how your existing agency functions. This includes fee structures, standard of landlord service and staff culture etc.
From the perspective of the seller or the one wanting to instigate a merger, we find the key concerns are discretion and confidentiality. Therefore it is imperative that you use a reputable Rent Roll Broker to implement and work through this process with you. To maintain confidentiality while doing this yourself is impossible, and we have seen so many disasters arise from those who have attempted it on their own. So if you are planning a sale or merger give us a call first to discuss your option. You won’t be sorry.