In a booming sales market like we are currently experiencing, why is the smart money now looking over the horizon for the next opportunity?

The answer lies in the fact that the sales market is red hot and expected to continue for the short to medium term.

As quickly as the market has rebounded from the depths of Covid, it’s only a few months ago market conditions for selling property were soft with longer days on market, buyer ambivalence, poor auction clearance rates and only average prices being achieved.

While nearly everyone is focused on the benefits of the sales market, a small number of exceptionally astute players are actively sourcing rent roll opportunities; they’re taking a countercyclical approach. With too many businesses focusing on sales only, a select number of our clients see this as the perfect time for rent roll aggregation -  they are ahead of the curve.

Nearly all of them have the same reason for buying rent rolls. They know sales conditions will eventually plateau. By staying ahead of the curve, they are future-proofing their asset while focusing on preserving the bastion of every real estate agency and that is cash flow continuity.

With most markets across the country seeing increased rents, some more than others, and corrections in rent roll multipliers, this small group of agencies are positioning themselves for what can best be described as the utopian real estate business.

Strategically this is where the rent roll covers 100% of the business’ annual fixed costs. In several cases, property management covers up to 125% of fixed costs to allow for the natural churn that occurs inside every portfolio.

With the fixed costs addressed it allows for the sales department to focus solely on generating sales. Again, they understand what revenue is generated after allowing for salaries and commissions is the net profit to their business.

Principals who are actively structuring their businesses on these lines are enjoying higher profits than most of their competitors, increasing the business’ value and have a very saleable asset as a going concern.

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters. 

This is a sponsored article.