The Geographical Spread of Your Rent Roll: How Much Is It Really Costing You?

If you ‘pin drop’ your Rent Roll into a program such as Google Maps, most Rent Rolls will find that they have a geographical ‘core’ of properties surrounded by some anomalies.  Many established Rent Rolls take the management of properties that aren’t geographically centric due to established Clients centralising their portfolios, friends and family or referrals.

The temptation of any new management within reason, regardless of its location, to the ‘office hub’ is high.  But how much is this temptation really costing you?

There are certain jobs in Property Management that are more scalable than others, and those that are less scalable generally require Property Management people to get into a car and visit a property.  (That’s the litmus test). 

Operations such as rent collection, arrears management, tenancy renewals, and in many cases, repairs and maintenance do not often require a visit to a property and are therefore more scalable.

Operations such as ingoing inspections, vacating inspections, routine inspections and leasing, for example, are less scalable.  They require a Property Management person to get into a car and visit a property.   It is these operations that can cost you dearly with properties that are not centrally located to your office hub or at least one of your team member’s homes.  If a property is located more than 30 minutes from your office – how much is this management truly costing you in staff wages, fuel, and the opportunity cost of not managing property closer to ‘home base’.

When it comes time to sell your Rent Roll, our Brokerage team looks at geographical spread very seriously.  It is one of the first things a qualified Buyer will ask when enquiring about a Rent Roll for sale.

Sometimes the geographical spread can be so great that our Brokerage team will split the Rent Roll into several parcels and have several Buyers, which will maximise the sale price for the Seller.  In other situations, the savvy Business Owner will look at this cost and sometimes elect for us to sell off a portion of their Rent Roll to maintain geographical and service cost control, thereby maximising their profitability.

In other cases, a savvy Business Owner might look at properties that are not centrally located and assess the benefits versus the risk of building a larger portfolio in certain areas.

Even with the advancement of technology, there are certain operations in Property Management that simply require people in cars to visit homes.  At Real Estate Dynamics, we are finding that Business owners are becoming more and more aware of service costs as well as what this landscape looks like then they eventually decide to sell.

If you have any questions about your Rent Roll and its geographical spread, complete the form below and we’d be delighted to speak with you.

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