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Do you know all the elements of a rent roll? This book is intended for those who are on the verge or in the throes of buying residential income-producing property. One of your foremost tasks in the acquisitions process is to validate contractual rental revenue. Rental revenue is most often provided to the prospective investor under the terms of a confidentiality agreement. This agreement prohibits from you sharing the information with anyone unrelated to the transaction. The seller will provide you with certain financial data, including the rent roll, for your inspection during the due diligence period. It is up to you to validate this information.
Buying rental property is not an impulse purchase. The acquisition process is a significant time commitment but one that can be very rewarding. As a prospective buyer, you need to know how to build, understand and use the rent roll to your advantage.
This long-awaited book by John Wilhoit is the worldwide industry standard on how to review and understand a rent roll. John lays out the history of the rent roll and then dives straight into the components of rent roll analysis. Anyone who has ever tried to get through an article or text book on real estate management will appreciate John’s step-by-step method for understanding how to review each piece of the puzzle, and how to get to the truth behind rent roll numbers.
John’s approach to rent roll analysis is based on his 20+ years experience working in multifamily asset management and the property management profession. His perspective is further broadened by his experience working in the public sector for both federal and state agencies and in asset management for a publicly-traded real estate investment trust (REIT). As an asset manager and owner-operator of apartments, condominiums and townhomes, John has developed his approach by administrating apartments in 38 states.
His blog, Multifamily Insight, provides his perspective on the world of multifamily acquisitions, management and investing. To subscribe, go to www.multifamilyinsight.com. Multifamily Insight is consistently at the top of internet search results for topics related to multifamily apartments, property management, multifamily asset management, multifamily finance, demographics, market analysis and multifamily acquisitions. In his blog, John presents a real world view of how professional property managers and asset managers address income-producing real estate assets.
- Learn the essential elements of a rent roll
- Understand the quality and strength of the in-place income stream
- Know how to measure and estimate future income
- Apply high-touch analytical tools to gain insight into operations
- Measure strength of income using the Rent Roll Triangle ™
Excerpts from "How to Read a Rent Roll"
The focus of this book is to guide you through a framework to unequivocally capture true contractual rental revenue.
The foundation of rental property ownership is to know what you are purchasing before you purchase it.
When buying a rental property you are in essence buying the rent roll.
Forecasting the value of income property rests squarely on knowing rental income.
Everything you do with your rent roll is aimed at determining the truth behind your numbers.
The purpose of the rent roll is to act as a current and historic record of rental revenue due the lessor based on valid, in-force leases.
A rent roll tells you the amount of contractual rental income you can anticipate for a given period, usually a month. The further reach of a rent roll is to convey in black and white the quality and longevity of projected income.
At the end of the day, under-stating income is reflected in an under-valuation of the asset.
In this book about rent roll analysis we focus on just rents for purposes of helping you to nail contractually consistent re-occurring income.
Knowing rental revenue in its purest form provides you with confidence in the decision to purchase and back-stops your reasoning for buying an income-producing asset.
Accomplishing sound financial analysis is predicated on having a solid grasp on actual, delivered rent roll revenue.
Identifying average length of tenancy is a significant determinant of tenant stability.
Validating rental income is the cornerstone of financial analysis for your income-producing assets.