I think they are his estimates. RNT has not put out forecasts....

I think they are his estimates. RNT has not put out forecasts. RNT did put out potential market size figures and I started researching those. You can see an earlier post I did about them. I've only now got time to come back and do some follow up research over the break.

Summary is that I think the market is substantially smaller than RNT estimates. RNT say 1m private rentals, but this seems to include public housing, community and company housing, etc. Per ABS the actual 'private landlords' properties are about 400k.

RNT also says the properties turn over every 10 months. My research on lodged rental bonds in NSW and VIC (which appears to be the best guidance on rental transactions) suggest average tenancy is somewhere between 18 and 30 months. (About 10% of all bonds turnover each quarter). This means an average of 2.5years for turnover.

Put those together and you get annual private rentals of 160,000 per annum (13,000 per month). If it is every 18 months it is 266,000 per annum (22,000 per month). These figures are much smaller than the company says.

Agent rental households are 1.4m per the ABS (same as what RNT says). This is between 46,000 and 77,000 per month based on 18 months or 2.5 years turnover. Again, substantially smaller than what RNT estimates. So if your total possible transaction is less than 100,000 properties per month, it is hard to see getting 500,000 unique people visiting the site each month on a regular basis.

Question is whether the market is substantial enough to make a good business and whether people will pay RNT for it compared to REA or Domain who currently control the market. This needs to take into account the current market cap of over $30m, minimal revenues and whether there can be growth in share price (and market cap) to justify the risk.

Cheers
Marv

DISCLOSURE: I don't hold RNT but am researching it at the moment.