Pros and Cons of RNT - Dog or Gem?, page-13

@Japon - I think this is where you and many others are getting confused.

I'm not disputing 1m private landlords. But the 1m private landlords includes those who use real estate agents.

RNT (in their presentation 20 October 2015) state there are 3m rental properties in Australia broken down as:
- 1.6m managed by 10,000 agents
- 1.4m managed by 1m non-agent landlords

Now if anybody cares to look at it, you can get extremely detailed information from the ABS based on the 2011 Census. Yes it is a few years old, but the housing stock in Australia grows fairly slowly, so it is the best data available.

One of the key figures is here:
http://stat.abs.gov.au/Index.aspx?DataSetCode=ABS_CENSUS2011_B32

You can drill into the datacubes and run all kinds of calculations.

That Census information (for 2011) says that there are 2.3m rented properties:
- 1.247m properties managed by real estate agents (so this is close to the figure per RNT)
- 0.314m are state/territory public housing
- 0.521m properties managed by non-real estate agents (not in the same household ie not sharing)
- balance is a range of other types.

We know RNT's monetisation strategy for the 1.247m managed by real estate agents. They want them to pay $150+ per month for a subscription (which lets them get better listing for multiple properties). There are 10,000 agents in Australia.

They also want to get private landlords (ie those who don't use a real estate agent) to pay a per property listing fee when the property is up for rental. This is where my problem is.

RNT say there are 1.4m properties managed by 1.0m private landlords. The ABS via the Census doesn't appear to agree with that. Or at least it says they aren't relevant.

It says there are only 521,000 properties managed by non-real estate agents. The state/territory ones and most of the others have no need to advertise so are not potential customers.

When you drill further in to the ABS data, you see the 521,000 are broken down into about 120,000 being properties where the person renting it is renting from a parent or other relative. With the balance renting from someone not related to them. So if you are renting from a parent or relative it is unlikely that property is going to need or want to list on RNT. That leaves potential properties available for RNT of 400,000.

400,000 is a lot less than 1.4m properties claimed by RNT. Whilst the 1.4m appears to be correct, they aren't potential customers for RNT. And potential customers is what is relevant.

They then say the average lease turnover is ~12 months, suggesting that each property can be listed on average once per year. (They previously had stated ~10 months average lease period). I think the average lease period is more like 2-2.5 years, so each property is only going to listed once per 2-2.5 years on average. This reduces the market size again.

This is my issue in relation to market size.

I will respond to your other post later, as I think whilst property management is an option with a large market size, it is fraught with danger in terms of execution risk.

Cheers
Marv