How profitable should your rent roll really be?
How profitable you’d like to be within a rent roll business is really dependent upon what your end goals are. If your end goals are to pay a few bills and just scrape by, then it really doesn’t matter, it’s about paying those bills. However, if it’s to set up the future sale of the rent roll or prepare for your retirement, it really needs to be based on what rent rolls are being valued at today. It’s not like the old days. It isn’t valued on three times the total amount of your revenue anymore. It’s valued on a couple of other things.
It’s valued on the profitability of your rent roll and the growth beyond the principal’s ability to be in the business. That is, if you’ve got systems in place, a property management platform that can execute your business without you being involved and growth based on the performance of the staff, the team, and the capability of the organization rather than the principal alone, you’ll have an organization and a rent roll that’s valued well beyond the total revenue.
So the size is less important these days. It’s the profitability and the growth capability. For example, if you’ve got a thousand strong rent roll and every year you grow by 30%, which does seem a lot, and your profitability is at 30%, your business is going to be valued a lot more than a business with a 2000 strong rent roll that only turns 2% profit. So what you’re looking to try and do within your rent roll is drive profitability as a consistent performance metric and growth that sits beyond the performance or the capability of the individual principal or owner of the business. If you can show 30% growth and 30% profitability on every piece of revenue that comes in, your business is going to be very highly valued.
If your target is to grow your business in that way, you need to be able to systemize, and you need to automate, and you need to make sure that your organization isn’t relying on one individual to execute. That means every process, every capability, everything that you do within the business has to drive a high quality outcome that provides the ability to be able to scale your business without putting on new staff. You also have to have a fairly lean organization. If your organization is so lean that you can run the business without one individual stepping out, you can put on a thousand new properties and not have to scale up the same number of staff that it took you to get to a thousand. This makes your organization look incredibly valuable to a buyer indeed.
Profitability in your business is very important. Let’s say it’s at 20% – 30% percent, and your growth needs to be at 30% year on year with no exception. To achieve that, you need the right framework. You need a way to execute your systems and processes in an intelligent way. This where Realm and our partners come in. Transforming organizations from old transactional models into new artificial intelligence and smart systems-based organizations is what we do best. Think of your business being able to transcend beyond the glass ceiling of 300, 400 or 500 properties and continue to grow easily and quickly, at scale, without increasing your costs to meet the service requirements of your tenants and landlords.
Amazing wins are here for the taking with the new cloud based software available, Realm’s artificial intelligence automating a whole host of repetitive tasks and making the ‘one to many’ conversations effortless, and potentially, including offshore outsourcing into the mix. You can have a really profitable business and a rent roll that is highly valued, setting you up for your retirement or for sale.
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Realm has spent two years building the industry’s first Artificial Intelligence that can talk to tenants, solve problems and support the property management team. The end result is a huge time saving on everyday property management tasks, an increase in managements due to technology leadership, a 24/7 tenant support system and lastly, new revenue opportunities all found, produced and driven by AI. Don’t get left behind, let Realm take you into the future!