“Rent rolls, the rental property portfolios an agency manages on behalf of landlords, contribute significant recurring cashflow to real estate businesses,” Marinucci explains. “In addition to recurring cashflow, if an agency buys a rent roll, typically 10% of those properties turn over every year. If the agent is doing a good job of managing the rental property on behalf of the landlord, the owner will come to them when it’s time to sell. This boosts the sales commission the office generates as well.”
3. Resilient risk profile
Clarissa Pietrobon (pictured, left), Queensland-based Relationship Manager at ANZ, says the resilience of real estate agencies through economic cycles typically enables them to keep servicing their loans, making them attractive prospects.
“Multiple income streams, which real estate agencies usually have, mean that when property markets are softer, property management income remains strong as investors hold onto their assets. Alternatively, when the property market is doing well and owners are considering selling, the rent roll business provides valuable sales leads,” she says.
Demand for acquisition, partner buy-in and working capital finance
Real estate agencies typically seek funding in three key areas to support their growth ambitions and smooth their cashflow.
1. Buying a competitor’s business
Pietrobon has observed an increase in consolidation and expansion activity.