Rental Express is the largest privately owned residential property management business in Queensland with over $1.5 billion of residential investment property under management across South East Queensland. Each year Rental Express conducts over 9000 property inspections and accommodates around 6000 tenants. Leased Magazine spoke to Chris Rolls about how the business was built.
After an initial investment of just $6000 in 2001 Rental Express become Queensland’s largest property management business and one of the largest businesses of its type in the country. It is an extraordinary achievement considering that the two owners, Chris Rolls and Stephen Sleswick were just 26 and 21 years of age when they started the business and that neither of them had any significant experience in real estate sales or property management. The Rental Express story is also unique in that the rent roll of more than 3000 properties was not built off the back of a massive sales business but as a result of a few strategic acquisitions and a dedicated focus on organic rent roll growth. The business started on 1 August 2001.
As you can expect we didn’t get much for our $6000 when we purchased the business, just a bunch of tables and chairs, a fax machine, a computer and the right to be a Harcourts office in Paddington-says Rolls-In fact, it was probably the most expensive bunch of tables and chairs ever purchased, but at the same time it was also the best business decision I’ve ever made.
For the first two or three years Rolls and Sleswick, ran the business like a normal everyday real estate agency, building a small but profitable sales team and learning all about how to sell property. Like any inner-city market the competition in Paddington, a trendy inner city suburb of Brisbane was fierce, and it took over a year for them to break even.
We worked hard, often seven days a week, just doing the basics, calling people and knocking on doors, doing whatever we could to generate sales-says Rolls. The ironic thing is that at first Sleswick and Rolls didn’t even have a Property Management department. It wasn’t until they moved to a bigger office to accommodate their growing sales team some twelve months down the track that they employed a property manager to build a rent roll.
At first we weren’t even interested in Property Management. We did what we were encouraged to do by our franchisor which was sell, sell, sell-says Rolls. Rolls believes that the reason so few agents concentrate on Property Management, is because of the influence of franchise groups who generate all their income from commissions on the sale of property. Most principals do just that, they focus all their time on building huge sales businesses, which are difficult to manage, highly volatile and worth nothing to sell.
It wasn’t until nearly three years down the track that they realised the error of their ways.Once we got about three years into the business, we wanted to fit out a much larger office to house our growing sales team. Somewhere we could fit 40 or 50 people. The problem was, we didn’t have the cash to do it-says Rolls.
So like any sales focused real estate business, they decided to sell their rent roll of about 300 properties-We got a business broker in who told us our rent roll was worth nearly $1 million. That was when the penny dropped. We realised we had spent all our time building a sales business when we should have been building a Property Management business.
Instead of selling the rent roll, they decided to borrow against it, and fitted out the new office. But instead of going back to their old ways, they employed a sales manager to run the sales business and started focusing more on Property Management, using a model where they would grow organically, to build equity and then borrow against it to fund small rent roll purchases.