What is a 'rent roll' in real estate?

A rent roll is the portfolio of rental properties that a real estate agency manages for landlords. It is a highly valuable business asset as it generates consistent, recurring income from management fees.

How do lenders value a rent roll for finance in Australia?

Lenders value a rent roll using a multiplier of the annual management income it generates. As set out in 'How are rent rolls valued?' above, a multiplier of between 2 and 3 is usually applied, so a rent roll generating $100,000 in annual fees would typically be valued at $200,000 to $300,000. The multiplier can be higher in major cities.

What can I use rent roll finance for?

The most common use is to purchase another agency's rent roll to grow your business. It can also be used to buy out a partner, release equity for other investments or as general working capital for your real estate agency.

Is the loan secured only by the rent roll itself?

Not always. Some specialist lenders will take security over the rent roll and its associated management agreements, but many require residential or commercial property as security instead. Which option is available depends on the lender, so check with the lender before you assume you will not need to offer other property.

What do lenders look for when assessing a rent roll?

Lenders assess the quality of the rent roll, including the average management fee percentage, the geographical concentration of properties, the average rent and the rate of arrears. A well-managed, profitable rent roll is key to getting finance approved.