Most businesses are valued based on their profit—what’s left after expenses. Buyers look at the bottom line and aim for a return on investment (ROI) of 30–40%. That typically translates to a sale price of about 2.5 to 3.5 times the business’s annual profit. But rent rolls are a different beast entirely.
Rent rolls generate recurring management fees earned from managing rental properties, and are valued based on profit. They’re sold on a multiple of management income, which is the top line revenue, before expenses are even considered. This is a major shift in valuation logic, and it’s one of the key reasons why rent rolls are so expensive.
Let’s break that down: if a rent roll brings in $300,000 a year in management income, and it sells for 3.00x income, that’s a $900,000 sale price. But if that same business is sold based on a $100,000 net profit, the sale price is $300,000 based on a 3x profit multiple. That’s a $600,000 difference, just based on what part of the income statement you use.
Why does this happen? It’s because rent rolls offer predictability and stickiness. Tenants pay rent every month. Owners need property managers every month. That revenue is locked in, recurring, and low risk. To a buyer, it’s as close to guaranteed income as you can get in business. This reliability pushes the value way up.
If rent rolls were valued on profit, they’d sell for maybe 9–11 times x profit. That’s an unusually high multiple for most businesses—almost tech startup territory—but it’s justified by the recurring nature of the revenue and low churn.
Bottom line: rent rolls are expensive not because of high profits, but because of how predictable and systemized the income is. When you’re buying stability, you pay a premium.
