Key elements when buying or selling a rental portfolio (NZ article)

Hamish Cropped Nov2014

An article by Hamish Turner (NZ)

Possibly the most critical aspect of purchasing or selling a rental portfolio is maintaining staff continuity. On a sale that may mean simply communicating on a regular basis and looking to sell the business with staff positions being maintained as part of the acquisition.

On the reverse side of things when buying a portfolio, the best way to maintain retention clients being purchased is minimal change to owner clients and this can be achieved many ways, the most important being no change to the property manager looking after clients properties.

Establishing value is a major element to selling or buying a business. Rent rolls have their own valuing methodology. If you are in doubt on how to value a rental portfolio there are a number of avenues available to you which include rent roll brokers or valuers along with banks that provide rent roll lending.

Also, it does not hurt to touch base with 1 or more experienced rent roll business owners to gain insight and for the most part other practitioners are generally pretty open.

Some other key areas on an on sell or purchase include completing due diligence on the rent roll you are buying. If selling, then ensuring your business is above the line in all areas that maybe subject to due diligence in advance of this occurring would be smart practice.

For example, completing a bond audit, hard copy file audit, key audit, ensuring rental arrears are at a suitable level, basically running a health check on your business and giving it energy where needed.

If selling, establishing who your buyer is and marketing your business accordingly is best practice. There is often high demand for rental portfolios, so if you are comfortable with 1 or more agencies in your trading area it may pay to have an informal coffee and discussion with them.

Likewise, staff under a principal’s employee are often motivated to take the next step up to ownership and can sometimes be completely overlooked. In terms of client continuity and retention rates, on selling to an employee is very smart practice and general minimal work on transition, so well worth investing time into.

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