What is your Average Annual Management Income (AAMI)?
Calculating the value of the Rent Roll is arguably the most valuable metric when considering selling. The value of a Rent Roll can vary depending on a number of factors, such as operational metrics (arrears, vacancies, maintenance), size, multiple owners, geographic spread, and the location and condition of the properties in the Rent Roll. A multiplier (the Rent Roll Multiplier – RRM) of the Average Annual Management Income (AAMI) will be applied to the Rent Roll to give you the overall value of the business, or portion you are selling.
So, how do you work out your AAMI?
- Determine the number of properties currently under management
- Work out the average weekly rent across the rent roll
- Work out the average management fee income
Your AAMI is calculated by your average weekly rent divided by 7 multiplied by 365 days multiplied by your average management fee income.
AAMI = Average weekly rent / 7 x 365 x AMI
Here is a AAMI example for you – if your average weekly rent is $400 and your average Management fee is 7.2%, your AAMI is $1,501.71. This is the average management income you receive from each management in your Rent Roll business.
To make it easier, complete the form below and download the Ready Reckoner to determine the AAMI for your business.