How To Read A Rent Roll: A Guide to Understanding Rental Income - Softcover

Wilhoit Jr., John

Softcover

ISBN 10: 0985002735 ISBN 13: 9780985002732

Publisher: WIN PUBLISHING, 2013

Synopsis

Do you know all the elements of a rent roll? This book is intended for those on the verge or in the throes of buying income property. In the acquisitions process you must validate contractual rental revenue. 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 and 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 book is a technical guide to rent roll analysis. The objective here is to narrow your attention to one thing and one thing only: estimating the validity, or reliability, of contractual rental revenue collected from income property. Why is this important? Because getting it wrong undermines any and all further work performed towards the goal of estimating Net Operating Income (NOI). If the revenue number is suspect, over-reported, under-reported or credit quality is without support, then what’s the point of devoting energy, resources or dollars to completing the rest of the equation towards NOI? Without a solid foundation based on valid rental income the balance of your due diligence is an exercise in futility.

About this title

About the Author

John Wilhoit's career has focused on high volume, large-scale multifamily communities including market rate and mixed-finance developments.  He has previously held positions with HUD, AIMCO and the Maryland Housing fund. Mr. Wilhoit holds an undergraduate degree in Business and a Masters in Urban & Regional Planning.

From the Back Cover

What is a Rent Roll?

The property owner's representation of rental income derived from an income producing real estate asset. Validating rental income is the cornerstone of due diligence and financial analysis when applied to income producing assets. Having incorrectly stated income skews all of the other percentages and ratios performed thereafter.

As an owner or buyer of income property, it is solely your responsibility to validate the numbers. It is your money and your equity that is driving the transaction. Therefore, it is your responsibility to accurately validate rental revenue through a careful examination of the rent roll.

• Learning Outcomes
• Learn the essential elements of a rent roll
• Apply "high-touch" analytical tools to gain insight into operations
• Use the Rent Roll Triangle to measure strength of income
• Understand the quality and strength of the in-place income stream
• Know how to measure and estimate future income

From the Inside Flap

Excerpts from "How To Read A Rent Roll"

Everything you do with the rent roll is aimed at determining the truth behind the numbers.

Accomplishing sound financial analysis is predicated on having a solid grasp on actual, delivered rent roll revenue.

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.

The purpose of the rent roll is to act as a current and historic record of rental revenue due 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.

Rent growth measures take into account dramatic occurrences or intentional causes that management or ownership implement.

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.

Identifying average length of tenancy is a significant determinant of resident stability.

Validating rental income is the cornerstone of financial analysis for your income-producing assets.

Edition details

• Publisher: WIN PUBLISHING
• Publication date: 2013
• Language: English
• ISBN 10: 0985002735
• ISBN 13: 9780985002732
• Binding: Paperback
• Edition number: 1
• Number of pages: 178