Property Investment Management - Residential & Commercial Brokers

Opportunity Snapshot

  • Country: Australia Australia
  • Industry: Real Estate
  • Stage: Start-up
  • Investment size: $4,000,000 / min. $25,000
  • Type of investment: Debt, Equity

Investment Opportunity

The opportunity is to establish a one-stop-shop business for the Residential and Commercial Rental markets. The funding of up to $4 million is expected.

By specialising in the field we have the experience in getting the best return for the property investor. The funds raised will be used initially to acquire up to seven real estate businesses and consolidate all seven into a single entity.

* Real Estate as a business or career path has being around for over a hundred years. When you think about real estate you immediately think of buying and selling of property, be it residential or commercial property. Success in real estate seems to always be measured in the number of property someone has sold.
* Property Management appears to be always in poor relations to Sales.
* Property Management is not for the light hearted. However, in times of need, it can offer financial rewards that can be liquidated into cold hard cash. Most offices make the crucial decision to include Property Management in their business model, while others just let it happen.
* Property Management is the most under-developed area of the real estate industry, which is surprising considering the amount of revenue that it can generate and the extra consumer attention it brings.
* Why is it that many offices recruit the receptionist to manage a lot of the responsibilities with little or no training? Receptionists progress to property manager’s position out of need rather than for the skills they possess.

The one thing I do know from my research is that while ever people need a place to live and property investors continue to buy property, they are going to need a property management company to manage the property for them because they can't keep up with all the laws and regulations about tenanted properties.

As mentioned above this a sector of the Real estate market that has been neglected over the years not only in Australia but also in the USA and UK.

At present we are at the stage of seeking out investors (Debt and Equity partners). Everything is in place so that we could commence negotiation on the acquisition as soon as we obtain the initial 50% instalments.

The cash payback period is 3- 5 years and project return is approx. 50% IRR.

After the initial funding very little additional would be required as the business would generate a significant cash flow. However, depending on how fast we wish to grow the business we would determine if any additional funding was required. 60% of any expansion could be sourced from a local bank at 8.5% over 10 years with 40% funded internally.

Competitive Advantage

Our competitors are the agencies that have Property Investment Management (Rent Roll) as a part of their business.

The advantage we have over our competition is that we are new and therefore we don't need to re-engineer our business model, as we will be using our innovative model from day one. By the time our competitor come understand what our business model is about we will be some 12 - 18 months down the track, before they even think about re-engineering theirs.

It is also our intention to become an E- Agency where everything in the office is electronic and paperless. Even to the extent that owners and tenants will be able log on and seek any information about their property.

Rationale for the deal

We are providing an opportunity to the property investor to help us establish a real estate company that has property management (PM) first and foremost.

This company structure is turning the real estate industry in complete 180 degree turn by putting property management (PM) first and the selling second.

From our investigations we have found that many property investors are crying out for a real estate business that will focus on property management first and foremost, the selling of real estate becoming a secondary focus to the business.

The reason we decided to maintain a sales division was to provide our clients (property ownera) a one stop shop if they wish to sell up or sell down their property portfolio, another service we can provide to our clients.
The intention of the Fund is to enable the acquisition and consolidation of up to 500 – 1000 properties under management. This number will depend on the amount of take up in the fund.

As the RPS Directors realized from first-hand experience that the GFC had created an investment opportunity in this area, the small rent rolls are no longer economical to run. Consolidation of these is vital, if we are to continue to have stable rental market where the investor can invest with confidence and tenants can be assured of ongoing accommodation availability.

The RPS team has many years of Property Management Experience through their various roles in the Real Estate Market and also as Property Investor.
RPS has been established to provide specialised products for property letting in the long-term rental market and services to property investors.
By specialising in the field RPS has the experience in getting the best return for the property investor with new acquisition.

Use of financing

The investment is required to establish a specialist arm in the Real Estate Industry specialized in Property Investment Management - a forgotten but much needed sector of the industry.

The reason to finance this business venture is to enable to establish a significant size business from day one and then expand it in the coming year. The plan is to at least double the size of the properties under management within the first 5years. Then we can take the business model nationally through a Franchise System.

The desired instalment would be to have at least 50% of the investment in place prior to negotiation with the sellers on the acquisition, then the balance in two instalment 30 days and 60 days. This would put us in a strong position to negotiating settlement.

Opportunity for the investor

At present we are prepared to look at either Debt Investment or Equity Inverstment or a mixture of both.

The overall amount we are looking for is up to $4,000,000 AUD depending on the negotiated price of the intended acquisition.

A schedule of suggested interest rate can be found in the information memorandum. Depending upon investment option the interest rates vary.

For the equity Investment a 10% dividend each year with a buyback at a 33% premium to the buying price.

We are looking for either a silent investor or a hands-on one (If the investor can add value to the day to day running of the business than of course we would welcome it).

Expected payback period would be between 3-5 years.

Return on Investment year on year will excel with average over the 5 years of around 40-50%.

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