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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

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

rent roll values are rising

Rent Roll Values are Rising!!

Rent Roll Values are Rising!!

In last month’s newsletter I wrote an article discussing the increase of the rent roll multiplier and improved value of the property management business. Thank you to those who responded providing feedback and thanking me for the information, I had the largest response ever to an article. This would suggest it is a subject of significant importance to most Principals.

The great news is, over the past month we have still seen further signs of recovery. Two Gold Coast rent rolls have gone under offer within just a few weeks with multiple offers on both in a market which was previously fairly tough. We continue to receive excellent buyer enquiry and feel more confident of achieving excellent value for quality rent rolls. Read more

Rent Roll Sales Qld merger

Rent Roll Sales Qld merger

Real Estate Agency Sales and Rent Roll Sales Qld has announced the merger of both companies and will operate under the Real Estate Agency Sales brand.rent rolls for sale brisbane

Kevin Hockey, Company Director of Real Estate Agency Sales, is excited about the merger of the 2 brands saying “The opportunity for twice the exposure, access to both client databases and the benefit from the knowledge and experience of both Real Estate Brokers is undoubtedly going to be of real value to all our clients”

Graeme Bagshaw, Founder and General Manager of Rent Roll Sales Qld, believes it makes a perfect fit. “Kevin and I have been friends for years now and we know how each operates. We both hold Ethics, Trust and Great Service as essential to our businesses and I see this as a natural transition to servicing the Read more

Rent Roll values are rising

Rent Roll values are rising

Rent roll values are rising again and I believe the signals are good for continued growth. Supply has slowed, demand has increased, the real estate market is improving and the oversupply of real estate agencies has now corrected itself to a certain degree.

Rent roll multipliers certainly took a hit over the past 18 months with some regions fairing worse than others. Read more

Property Management - Grow Your Rent Roll

Property Management – Grow Your Rent Roll

Everyday in our role here at Real Estate Agency Sales we are talking to Principals and Property Managers about the Property Management portfolio and how they can grow it. Here are some quick tips on how to grow your rent roll.Rent rolls for sale Real estate agency sales

What are the top 5 proven strategies to growing your rent roll?

  1. Your Sales department. Does your sales team recommend you at every opportunity? Do you train your sales team on how they can easily create Property Management leads? Do you meet with your sales team to discuss how both departments can be of mutual benefit?
  2. Networking. Do you actively meet with people of influence and who can refer Landlords to you. Do you network with potential new landlords? Read more
Principals – Stop Training

Principals – Stop Training

Yes, that’s right – Stop your current training. Stop learning how to make more sales and attending Property Management seminars and start learning more about running your business. Real Estate industry training seems to be more heavily focused on Sales skills like negotiating, listing presentations, achieving a higher fee or Property Management skills. As a business owner, you need to be a great CEO.

Thanks for thinking of us but Real Estate Agency Sales will be ok, we will still make sales. We just don’t want to see you and your business in severe financial hardship. We most certainly don’t want to talk to your bank or the receivers that have been appointed. Sadly, I’m receiving too many of those phone calls.

This recent article http://tinyurl.com/74dycn6 explains 2700 businesses went broke in 3 months prior to Christmas. In a different article from external administrator reports supplied to the Australian Securities and Investments Commission, it says “too much failure is self-inflicted”.

Read more

12 Simple Tips for Selling your Rent Roll Business

12 Simple Tips for Selling your Rent Roll Business

We all know the difference between selling a well presented, attractive property to a poorly presented, unkept house.Rent roll broker real estate agency sales Buyers are far more attracted to a quality home and more likely to pay a premium price. Sometimes we ask sellers to put on their buyers hat and consider their homes worth and presentation through those eyes.

Selling your business is no different.

The presentation of your business to the market is vital to achieving your desired outcome.  A buyer will also require written evidence of all the information provided. They will take nothing on face value and will be receiving advice from their solicitor, accountant, bank manager and possibly friends and family prior to making any decisions. We need to present the property for sale in a method to convince all parties of the value of your business. Read more

A Quality Rent Roll Defined

A Quality Rent Roll Defined

With a lot of activity at the moment regarding Principal’s expanding, selling or merging, rent rolls and their value is a hot topic for discussion.

Understanding the value of your business provides you the opportunity to take advantage of the current market and expand your Business operations and Property Management Division through the acquisition of other rent rolls. Banks will loan to you on the basis of your rent rolls value, talk to your bank manager regarding conditions which apply.

If you are considering selling your rent roll, understanding the mechanics of its value allows you to ensure a Premium price is achieved. Talk with Kevin Hockey today about how you canmaximise your sale price.

A Quality Rent Roll defined. Read more

Borrowing against your Rent Roll

Borrowing against your Rent Roll

This is the year of opportunity – for those willing to grasp it. American Entrepreneur Warren Buffet said, Be fearful when others are greedy, and be greedy when others are fearful. Seems like the world is pretty fearful, so is this our chance to be greedy?
To take advantage of the potential opportunities which may arise for you and your business, you may need help funding your progress. This is where your rent roll once again becomes such an invaluable ally to your business. Apart from generating income, assisting in increasing market share, building your database and providing listing leads to your sales department, you may also borrow against your rent roll secured solely against your portfolio.

Like a snowball racing down a hill gathering enormous momentum and strength, this amazing asset called Property Management can self stimulate the growth of your business, if you allow it!

Read more