While traditional real estate agencies have many lucrative opportunities, any agency can grow its rent roll. Rent roll is one of the most advantageous routes you can pursue in small business real estate ownership.
With the rent roll real estate agency business model, owners usually get next to nothing when they sell their sales office, but the rent roll may sell for between 2.7 – 3.5 x times what it earns each year – and that can be a very big number indeed.
Be sure to consider all of the following factors in successfully running a rent roll business.
- Lay the foundation for not only how you plan to care for properties included in the sale and the level of service you provide, but be sure to also find out the level of administration and support these landlords have been accustomed to.
- Don’t forget to care for existing landlords while bringing in new ones. If you don’t dedicate enough attention and care to them, you will simply be replacing them with new clients, instead of building your rent roll.
- Make sure that you have a plan in place to welcome new tenants into your business. Unhappy tenants can add many hours each month to your workload, so discuss any areas that have been overlooked at their rental property you can now assist them with.
Discover your challenges and position yourself on the road to success
- Challenge your competitors. Steer clear of letting your sales team hurt themselves, and ultimately your bottom line, by surrendering to the way of thinking that says “that’s just how it’s done in this area” to explain why they do the same as their competitors. This is a huge error and can be the biggest profit-killing trap affecting more than 98% of agents. Be creative and forward-thinking! The right sales team will largely lead you toward success.
- Don’t accept the status quo. Don’t accept mediocrity! Many real estate agents have capitulated to just being average...don’t accept it at your agency. As the owner, insist that your staff hold themselves to high standards and you will get positive outcomes.
- Spend more in high return areas. Lead your team so that they learn to expand their opportunities to areas where high returns are possible, and even expected. Then, your most successful agents should concentrate their time in these high return areas, not wasting it in the areas of potential low return.
- Don’t focus on gross income. Don’t fool yourself into thinking you are a success by focusing on the wrong outcome. Experts say that “turnover, or gross income, is the second most common measurement in real estate. It is very dangerous as it makes no allowance for expenses. Many agents win awards for high turnover, at the same time as they are making a loss!”
- Don’t overspend in the wrong areas. Often, agents are puzzled as to why they work hard but receive so little. Know which business-related expenses cause the most danger to the bottom line. These costs have the following attributes:
- They nearly eliminate, or greatly reduce, profit.
- The financial return is less than the expense (commissions, marketing, etc.)
- The expenditure would possibly produce a higher return if spent elsewhere.
- These intermittent accomplishments become confirmation for sustaining the expense.
Website and Online tenant portal
In addition to a spectacular website that puts your agency’s best foot forward, be sure to consider the benefits of an online tenant portal so that your rent roll can easily be managed every month. This tool allows tenants to apply for properties, pay rent online, report a maintenance request, and communicate directly with your office outside of time-consuming phone calls. For ease of access, you should provide a prominent login link to your portal on your main website.
Follow these guidelines, and you will be well on your way to building a successful real estate business that will be around for years to come.