An Action Plan for Building Your Rent Roll in Commercial Real Estate Agency

In commercial real estate brokerage, your rent roll can be a massive source of opportunity.  Over time you can create further commissions from leasing activity, and sales activity.  A special note should be made here that the fee structure that you set for any property management listing appointment should take into account the other fee opportunities potentially coming from leasing and or selling.  Be prepared for the forward events that could occur with your managed properties.  Set your fees accordingly at the time of negotiation with the property owner.

In the sale of any real estate brokerage or agency, the rent roll will provide a stable source of income that can enhance the price that is paid for the brokerage itself.  The larger the rent roll, the better the potential price for the agency.  When all is said and done, the only thing that is really attractive in the sale and purchase of a real estate business is the rent roll.  It brings in ongoing stable income whilst the commissions from sales and leasing may be quite variable.

When considering your business plan for the brokerage, structure in factors for growth of rent roll and property management fees.  Here are some tips to help you build that rent roll:

  1. Every successful sales transaction to a property investor will give you the opportunity for a potential property management appointment.  Given the complexity of property management today, and the reporting requirements associated with income, expenditure, and taxation, it is very easy to make a case for managing a property for your clients and landlords.
  2. Review all of the properties in your local area for any vacancy pressures.  Landlords with vacancies will need help when it comes to finding a tenant.  Most landlords do not have the coverage of the market to attract the quality tenants that they require.  From every successful lease transaction, it is quite possible to ‘open the doors’ on a potential property management appointment.
  3. On a street by street basis approach the owners of any and all quality investment property.  Logically move through the ownership records of quality properties; set your property targets.  Some of those investors will be open to the advantages of using professional property managers.
  4. The property management fees charged for managing a property can be recoverable under the terms of the lease (subject to local property laws).  It is a matter of having the lease of the property suitably structured for this purpose.  On this basis the tenant can be paying the management fees as part of their regular outgoings payments and recoveries.  This then means that your property management fees are cost neutral to the owner of the property.

It can take some time to convert a property investor into using your property management services.  Regular ongoing contact is required; as part of that contact you can provide property updates and local market information.

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