Let’s start by looking at what is a rent roll ? Basically, it’s the property management or rental division of a real estate office that deals directly with prospects and tenants, collecting rent, handling maintenance and repair issues, responding to tenant complaints, and even pursuing evictions.

In return for these services, the real estate business is paid a management commission on the weekly rent in addition to other fees and charges for things like finding a tenant (let fees) and other small administrative charges. 5-6% of $700pw rent ($35-40pw) may not sound like much, but when the business has 500, 700, or even 1500 management agreements in place it’s a very different story.

These rent rolls are actually saleable, and very valuable businesses. Here’s just five reasons why:

1. According to the Australian Bureau of Statistics (ABS) Australia’s housing stock is valued at more than $5 trillion dollars – to put that in perspective that’s 2.5x times the value of our collective superannuation assets which are approaching $2 trillion. 

2. Investors make up the biggest share of new mortgages, and they need a Property Manager to find them a quality tenant, collect the rent, and handle all the day to day issues with the property.

3. Many first home buyers remain sidelined due to surging property prices and are forced into renting. You won’t buy a 2 bedroom apartment in Sydney’s Wentworth Point for under $700,000, so the first home buyers rent in Wentworth Point for between $650-700pw. The pattern is consistent in most capital cities.

4. Interest rates are at record low levels and look like staying there for some time – investors across the country are borrowing interest-only money, locking in on fixed rates for 5 years, covering all there costs including paying the property manager, and waiting for capital growth.

5. The rent roll is the true underlying value of any real estate business. Owners get next to nothing when they sell the sales office, but the rent roll may sell for between 2.7 – 3.5 x times what it earns each year – and that can be a very big number indeed.