How are Rent Roll Valuations prepared?
Although there is no "one size fits all" method for determining rent roll valuations, the actual valuation process is very well defined. The annual management fees are applied to a Rent Roll Multiplier (RRM). When you consider that quite often in the world of real estate, it is the rent roll that is the significant part of the value in the business. It is crucial that the rent roll valuation is correctly prepared.
Annual management income is the total income from management fees and rent collection excluding GST, for a period of twelve (12) months, for each property. The ancillary fees (i.e. advertising fees, administration fees, inspection fees, re-letting fees) are omitted.
The RRM is derived from a number of factors affects the rent-roll. For instance, although the ancillary fees are not included in the overall management income, they do have a bearing on the Rent Roll Multiplier.
Factors affecting Rent Role Multipliers
- Occupancy rate
- Average rental
- Term of Contract
- Number of rentals
- Type and condition of properties
- Arrears rates
- Vacancy rates
- Due diligence
- Current court actions
- Type of lessor
- Time rent roll has operated
- Staff and wages
- Supply and demand
- Geographical spread
- Landlord : property ratio
- Ancillary fees and charges
- Current interest rates + economy
- Rent guarantee arrangements
- Compliancy to legislation
Valuing Rent Rolls can be a very extensive process. If you are thinking of selling one or would like to discuss the possibility of obtaining a rent roll valuation, contacting us for a confidential discussion is the first step to obtain a professional valuation of your portfolio. Business Reports and Values can provide you with a comprehensive rent roll valuation at a very competitive price. We have the qualifications and experience to provide a quality valuation report for any requirement.
The principle of Business Reports and Values, Lee Goldstein, has been involved in Business Valuations since 1985. He holds the following qualifications:
Double Major Degree in Accounting and Finance
Diploma in Forensic Accounting
Graduate Diploma in Valuation
Advanced Certificate of Business
Advanced International Certificate in Intellectual Property.
Lee has conducted numerous intellectual property valuations covering a diverse range of industries, and is often called upon to provide expert testimony in judicial matters. Lee has valued businesses and intellectual property worth over $3.2 billion.
Lee Goldstein has been the Triennial Certificate holder and Licensee of a Business Broking Company since 1992.