The One Number That Makes or Breaks a Lettings Agency Deal
Ask most buyers what they check first when they're looking at a lettings agency, and they'll say the accounts. Turnover, profit, growth trend. All sensible. All incomplete.
The number that actually decides whether a deal is safe rarely appears on the accounts at all: how much of that income sits with one landlord, or one small group of landlords.
A healthy-looking book can be one relationship deep.
We've seen it happen. A buyer completes on the strength of strong, steady numbers. Within months, the largest landlord in the portfolio, the one who never came up in a single conversation during the sale, decides to sell up, switch agents, or simply stop returning calls. Close to half the managed income goes with them. The historic numbers were entirely real. The risk sitting behind them just wasn't visible from where the buyer was standing.
Why sellers don't lead with this.
It's not usually dishonesty. It's more that concentration builds up slowly, one good relationship at a time, until nobody in the business has stopped to add it up. The seller genuinely doesn't think of their biggest landlord as a risk. They think of them as their best client.
What to actually ask for.
A revenue breakdown by landlord, not just by property. If one or two names account for a large share of managed income, that's not automatically a dealbreaker. Some of the best acquisitions we've supported involved exactly this. But it changes the conversation. It changes how you structure the deal, what protections you build in, and what price reflects the risk you're actually buying.
The question sellers rarely volunteer the answer to.
Which is exactly why it needs to be asked, directly, before terms are agreed rather than after.
If you're weighing up a lettings agency and the concentration numbers haven't come up yet, that's the first call worth making.
That's what we do at Russou.
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