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Growth-hungry property management businesses could be in a position to capitalise as ageing principals search for an exit strategy from the industry.
According to a recent straw poll on Residential Property Manager, 41.7 per cent of respondents plan to buy a rent roll in the next 12 months.
Paul Brooks, director of rent roll brokerage Real Estate Dynamics, said a significant number of business owners are thinking about retirement.
Mr Brooks told Residential Property Manager that a lot of these older principals are selling their entire rent rolls, often with staff included, as a way of getting out of the industry.
“There is a total misunderstanding by a lot of real estate principles on the process of buying a rent roll and that’s why they haven't bought one,” he said.
“I think they're afraid of growth because they don't understand property management as much as they understand sales.”
Mr Brooks said agencies that grow their rent roll now could put themselves in a stronger position if there is another market downturn.
“As we know, 10,000 people left the industry in the last GFC, so are they going to be a statistic or are they going to survive?”
One of the downsides of organic growth is that property management businesses can pick up unhappy landlords, according to Mr Brooks.
“You are better off buying a rent roll – say, 200 properties, all happy landlords, all rented properties – and plugging it in to your business,” he said.
“With interest rates being the lowest they've been for 50 years, most rent rolls are being sold positively geared from day one.”
Mr Brooks said agencies can use their existing rent rolls to help fund the purchase of more managements.
“Most people are sitting there with an asset in their business which is not leveraged, not mortgaged, and they know everything about buying property but they know nothing about buying rent rolls,” he said.
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