Northside Brisbane Agency + Rent Roll #438

Northern Suburbs Agency + Rent Roll for Sale A rare offering on Brisbane’s Northside is now available. This is an outstanding Agency and rent roll located in a key residential area that boasts great returns and has enormous potential to grow further.

SEQ Regional Centre Rent Roll for Sale #437

URGENT – MUST BE SOLD!!! Smaller portfolio of properties boasting very high averages and excellent returns. This is a unique opportunity and a rare offering!!

Yes, you have to provide a Profit and Loss if you want to sell your Business!!

by Kevin Hockey
Real Estate Agency Sales

A common question when a Seller wants to sell their business is “Do I have to provide a Profit and Loss?”

It’s important at this point for the Seller to put on their Buyers hat and ask themselves a few questions.
1. Would you buy a business without seeing vital income and profit data?
2. What would you automatically think if a Buyer said to you they didn’t want to provide a P & L?

Reality is no buyer will purchase your business without seeing a P & L. It just isn’t going to happen. Rent Roll yes, the Business no.

How do we deal with selling an agency where the Seller believes their P & L will appear less than favourable?

Here’s a few tips.

  • The first thing is speak to your accountant and let them know you are considering selling and could they please provide a Profit and Loss for sale purposes.

It is normal business practice that any Directors costs such as wages, expenses such as cars, phones, personal add ons and any other costs directly attributable to the owner will be removed. It might just be the circumstances aren’t as dire as you thought although a buyer is likely to add back in their own estimates of these expenses.

  • Take some more time before Selling and begin to make profit. This of course is much easier said than done and is rarely a viable option. In fact, it’s quite possible this could slip you further behind.
    Do you really really need all your staff?
    Do you really need to provide all those services or marketing commitments?
    Are there leases and costs you can eliminate or at least reduce?
    Can you sell the Company Vehicles if you have them?
  • Price it accordingly. The Rent Roll should maintain it’s value regardless of the Profit & Loss and it is where 95% or more of your value is likely to come from. The Sales Business value however will likely be minimal.
  • Structure the sale to suit. For a quick sale you might choose to sell the rent roll and simply vacate the premises. Of course this may be more difficult should you still have a lease in place.

If you have a lease in place and are selling the Rent Roll separately for a quick sale, consider these options.

• Talk to the shop next to you, they may consider expanding into your area.
• Speak to the Landlord about exiting your lease early
• Pay out the remainder of the lease from the Rent Roll proceeds
• Find a new potential tenant for your office
• A staff member may not be able to afford the Rent roll portfolio however they may be interested in the Business with minimal cost to purchase. Therefore sell the Rent Roll and Business is separate transactions.

In short, if you are selling the Agency you will need to provide a Profit & Loss to potential buyers.
If you are only selling a Rent Roll, no Profit and Loss is required.

For more advice on Selling your Agency contact Kevin or Grant at Real Estate Agency Sales today.

Kevin: 0447 555 683 or kevin@reas.com.au
Grant: 0430 198 889 or grant@reas.com.au

When Real Estate Agencies go Crash!!

by Kevin Hockey
Real Estate Agency Sales

We genuinely love helping Principals to sell their Rent Roll and Real Estate Agency.

I experienced the reality of owning my own Real Estate Business, the long long hours, the risk associated to having your home on the line, working hard sometimes just to pay other people’s wages, the sacrifices you make and the time it takes you away from your family.

We really enjoy helping Principals realise the benefits of their efforts and those sacrifices, often over many years, when they sell their business. Our approach at REAS is designed around those exact messages.

Enjoy your Success
Freedom
Take Control
Life is now in Session
Imagine

This is our main motivation here at Real Estate Agency Sales to do what we do.

Sadly though it’s not always a reward when some Principals sell. Sometimes they’ve found themselves in a position where they have to sell.

We had an office recently where after decades of successful trading the business was forced to sell. It was devastating seeing a good man lose it all after so many years of hard work and effort.

But it shouldn’t have happened and he’s not the first and won’t be the last.

We’ve sold stock under receivership or administration in the past and no doubt will again. (the office mentioned above was not in receivership or administration) There’s never a happy ending.

I’ve been in business since I started my own furniture business at 23yo. I’m now 53. I began my Real Estate career in 1997 opening my own agency in 2000 and I’ve been brokering Real Estate Agencies and Rent Rolls since 2008.

This is what I’ve learnt about why Real Estate Agencies collapse and there’s no complex reason.

1. Management burn out.

Real Estate is getting harder and the pressure on Principals is becoming more challenging every year.

Recruiting good staff, training and motivating the team, handling customer complaints and issues, implementing new technology and managing costs to run the business are all wearing Principals down.

Eventually the toil tells.

The challenge is identifying it in time. If you hold on you run the risk of losing key staff and losing your position in the minds of your clients and customers to a point it won’t be retrievable.

You need to take time out to re-energise or make the decision to cash out and take a new direction.

Do it now before it’s too late!!

2. Management skill

No greater difficulty is there for a Principal then to generate profit in this tech driven age where compliance and competition is placing enormous pressure on the bottom line.

I wrote some time ago about the need for Principals to stop training. It was a tongue in cheek title targeted to get Agency owners to stop training in Real Estate, which they are obviously already skilled at, and focus on getting better at running a business.

You can read it here – http://reas.com.au/principals-stop-training/ 

Too many Principals don’t have the Business skill levels required. I get to look beyond all the marketing and ego driven BS and go straight to the Profit & Loss. The wasted dollars spent by Principals is staggering.

Most people would be surprised at which offices are actually the profitable ones. Profitable offices usually have good profiles in their local market, are not trying to cover vast regions and have good, solid, medium to large sized rent rolls. The owners work in the business, apply good business acumen and are consistent in what they do.

They have a plan and stick to it. They consistently analyse their Income and Expenses and know their numbers.

The good offices I sell, the Principals always know their position. They are able to quickly provide me the data required for me to sell the business. Spreadsheets, information, leases and all I require are at their fingertips.

They KNOW what’s happening in their business.

Too many Principals however don’t have easy access to key information and take weeks and weeks to provide the most basic details to allow me to begin the process of selling. In most circumstances these offices make the least profit and the rent rolls from these offices are the most likely to have lower management fees and higher arrears. This is commonly a problem of lower management skills.

If you want Premium value for the sale of your business, be that first Principal.

3. No organic growth plan

I began a sister business, Massive Rent Roll Growth, a few years ago for 2 reasons. Firstly I was receiving calls from Buyers looking to purchase a rent roll and there were none available. When I asked about their organic growth plan, it became apparent they didn’t have one. A common answer was “we tried a BDM and it didn’t work”.

Secondly I spoke with Principals 6 or 12 months after purchasing a rent roll and instead of leveraging off the purchased portfolio to grow more, the portfolio had actually gone backwards and now they had less than they had purchased. This led them to being at high risk with their banks in their lending ratios.

This is dangerous territory for any real estate agency.

I set about writing a manual to help Principals to have the tools on how to Grow their Rent Roll and maximise the opportunity from purchasing a rent roll. Firstly I wrote 25 Strategies to Grow your Rent Roll – http://reas.com.au/reas-services/25-strategies-to-grow-your-rent-roll/ 

I detailed as much information I could about the methods to generate Property Management leads from my own experience in growing my rent roll and tips I’d learnt from years of working with BDM’s, Property Managers and Principals.

Next I thought, it’s ok knowing the strategies to apply but the process really needs to be managed so I wrote 5 Steps to 150 Managements.
https://reas.com.au/5-steps-150-managements/ 

This e-book is designed as a management tool to allow an agency to consistently generate 150 new managements every year by applying 5 simple Steps.

We have sold a few copies but haven’t promoted them at all. Trying to promote too many brands was losing the message and now we have brought it all under the one banner here at REAS. Mostly we have just talked to clients on the phone and offer the opportunity and they see great value and buy it. If you would like a copy follow the links above or contact me any time.

In Summary,

1. Take time out and don’t burn out.

2. Ensure you have the Business acumen, not just real estate skills

3. Have an organic growth plan to leverage from your rent roll purchase.

Contact Kevin Hockey or Grant Newsome from Real Estate Agency Sales anytime at:

Kevin: 0447 555 683 or kevin@reas.com.au
Grant: 0430 198 889 or grant@reas.com.au

Industry Future

by Kevin Hockey
Real Estate Agency Sales

How may the traditional Real Estate agency change?

There’s plenty of discussion about real estate models effecting the real estate industry but what about market forced change?

We are in the middle of a changing attitude with today’s younger generation which has real potential to have a genuine effect on how we run our real estate business.

Property prices in Australia now see us with some of the world’s highest values which for us homeowners has been fantastic. But what about those wanting to enter the market?

A 2017 Federal Budget report stated close to 70 per cent of Australians are very concerned, or somewhat concerned, they will never own a property. Only 14 per cent have no concerns.

It continued by saying “More of us believe owning a home is beyond our grasp, and one in five struggle to keep up with housing payments”

The Findings from a Griffith University report by Andrew Worthington stated
“Housing affordability in Australia has worsened significantly in the past quarter century, including both urban and regional areas, and is now among the world’s most unaffordable”.

The facts are, today’s youth no longer aspire to own their own home. They now place travel as a priority. The cost of purchasing a property is a high factor, they simply believe owning a home is out of reach.

I have 2 sons and I’ve had this conversation with them. Cameron, our youngest moved out in 2015 when he was 20yo into a house with 7 mates mostly from school. They paid $840pw for a beautiful big home on Brisbane’s northside in a great area with a pool. Between them they could split the costs to a very affordable level and live in a home they could never have otherwised hope to afford.

We talked about investing in property. Cameron is a steel fixer and has always earnt good money but the cost to buy was too risky he felt. “What if my work stops” he would say, “I couldn’t afford it”. Turned out his industry slowed down significantly and for the last 2 years his work has been very spasmodic.

We also know children are living longer at home with their parents, another method of saving for today’s generation.

Our future buyers are having a dramatic change of attitude toward the great Australian dream. If this continues what will be its legacy?

How could this effect our businesses?

Could Property Management become of even greater importance than it is now?

What effect would any interest rate rises have on the market?

Are our businesses prepared for any of these changes?

How long can property prices continue to increase at this same rate?

What are your thoughts?

Kevin Hockey
Real Estate Agency Sales
kevin@reas.com.au
www.reas.com.au

Whitsunday Region Rent Roll for Sale #414

Priced to Sell FAST – Don’t miss the opportunity!!! Available immediately is this smaller portfolio in the very popular and sought after Whitsunday region.

Brisbane West Rent Roll for sale #419

Available now is this small portfolio of investment properties on the west side of Brisbane displaying good returns and incomes.

Brisbane East Rent Roll for sale #418

Available now is this small portfolio of investment properties in Brisbane’s East displaying good returns and incomes

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Available now is this portfolio of investment properties on the south side of Brisbane displaying good returns and incomes.