5 Biggest Mistakes Agents Make When Conducting Due Diligence on a Rent Roll

O*NO! I Bought a Rent Roll... and Found Out Too Late What I Missed!

Buying a rent roll should be a smart move. Growth. More income. Bigger business. But here’s the catch—if you don’t do your due diligence properly, that great investment can quickly turn into a giant headache (and a costly one at that). 

As lawyers for real estate agents, we’ve seen too many agency owners skip critical steps in the due diligence process—either because they didn’t know better or were in a rush to close the deal. 

In this blog, we’ll walk you through the 5 biggest mistakes agency owners make when doing due diligence on a rent roll—and how to avoid them. So, if you’re thinking of buying (or even selling) a rent roll anytime soon, this is your must-read checklist.

1. Only Doing a Spot Check Audit 

Here’s the scenario: You’re told there are 400 managements in the rent roll. You decide to “spot check” just 10% of the files. Easy, right? 

Here’s the trap: many buyers allow the seller to choose which 10% of files get reviewed. Surprise surprise—they’re usually the best, cleanest ones. 

If you only do a spot check, make sure you, the buyer, select the sample. And don’t just go for the first 40 on the list—pick a random mix of properties, suburbs, and managers. 

Even better: If your audit uncovers red flags (missing documents, incorrect management fees, or outdated agreements), it’s time to audit 100% of the files. You’re about to spend serious money—don’t rely on guesswork. 

2. Using a Due Diligence Clause That Starts the Clock Too Soon 

We’ve seen this in so many contracts: “The buyer will have 14 days from the date of the contract to conduct due diligence.” Sounds fine, right? Until you realise this: 

It’s day 12 and you haven’t even received the rent roll data yet. 

That’s like starting an exam before getting the questions. 

Here’s how to fix it: make sure your due diligence period only starts once you’ve received all the data you need to complete your review. That means trust account reports, rent roll summary, full access to tenancy files, management agreements, and anything else you need to assess the portfolio. 

Your lawyer should amend the clause so it reads something like: 

“The Due Diligence Period will commence from the date the buyer receives all requested due diligence documents from the seller to their reasonable satisfaction.” 

This gives you real time—not rushed time—to do it properly. It also shows that the seller is serious, ready and not there to waste your time. 

3. Assuming Your Internal Team Can Handle the Review 

Let’s be honest. Your property management team is already swamped. Asking them to “just review a few hundred files” on top of their daily workload isn’t fair—and usually ends up in shortcuts, missed issues, or burnout. 

Even if your team has the knowledge, they likely don’t have the time. 

Due diligence is a full-time project during the review period. It needs focus, accuracy, and a systematic approach. We recommend bringing in an external reviewer—either a specialist consultant or lawyer who knows what to look for. 

That way, your team can keep doing what they do best—managing clients and properties—while your deal is being properly vetted in the background. 

4. Assuming Everyone Knows What a ‘Compliant File’ Means 

You’ll often see this line in rent roll contracts: 

“Buyer will only pay for compliant managements.” 

Sounds good. But what does “compliant” actually mean? Does it include a signed management agreement? Entry condition report? Proof of bond lodgement? Tenant ledger? Communication history? VOI? 

If you don’t define it in the contract, you’re setting yourself up for confusion—and potentially paying for files that don’t stack up. 

We recommend clearly listing the minimum documents required in each file for it to be considered ‘compliant’ and worth paying for. That way, both parties are on the same page, and if a file is incomplete, you can either exclude it from the purchase price or require it to be corrected pre-settlement. 

5. Not Allowing Enough Time for the Process 

Even if you know how long it takes to review a file—let’s say 15 minutes each—you still need to build in buffer time. 

What happens when: 

• You need to chase missing documents? 

• You uncover discrepancies in fees or rent amounts? 

• Files are stored in multiple places or require login access? 

• You hit IT or data issues? 

If you’re working to a strict deadline, even minor delays can derail your whole process. 

We recommend leaving at least 25–50% extra time than you think you’ll need. It’s far better to finish early than to find yourself negotiating an extension (or worse, buying a rent roll you haven’t had time to properly vet).  

Key Takeaways

• Pick your own sample: If doing a spot check, you select the files—and if anything looks off, review 100%. 

• Start the clock right: Make sure your DD period only starts after you’ve received all the necessary data. 

• Don’t overburden your team: Use external experts to run the audit, so your internal staff aren’t stretched too thin. 

• Define compliance: Clearly state what a “compliant file” includes in your contract. 

• Allow breathing room: Give yourself more time than you think you’ll need—things always take longer than expected. 

If you’re planning to buy a rent roll—or even just considering it—the time to get your legals and processes sorted is now. Don’t make costly mistakes just because no one told you what to look for. 

We’ve helped dozens of agency owners run smoother, safer rent roll transactions—and we’d be happy to help you too. 

Next Steps

Book your free 10-minute chat and let’s talk about how to protect your next purchase. 

Frequently Asked Questions (FAQ)

• What’s the biggest risk when buying a rent roll?

  The biggest risk is skipping thorough due diligence, which can lead to overpaying or inheriting non-compliant or poorly managed files.

• Should I let the seller choose the audit files?

  No. Always select a random mix of files yourself. Letting the seller choose often results in only reviewing their best files.

• When should the due diligence period start?

  Only after you’ve received all necessary documents—not from the contract date. This ensures you have enough time to properly review everything. 

• What makes a file ‘compliant’?

  A compliant file should include key documents like a signed management agreement, bond lodgement, condition report, and tenant ledger. Be sure to define this clearly in the contract.

Kristen Porter – Legal Director, O*NO Legal

Kristen Porter is the Founder and Legal Director of O*NO Legal. With over 20 years of legal experience and dual degrees in Law and Commerce, Kristen brings a rare blend of legal expertise and commercial insight to every matter. She is a trusted advisor to business owners and agency leaders across Australia, helping them build profitable, legally-sound businesses. Known for her practical, no-fluff advice, Kristen specialises in real estate agency law, corporate, and privacy law and regularly presents at industry events. At O*NO Legal, Kristen leads a team committed to making the law clear, actionable, and always aligned with your business goals.

Boring legal stuff: This article is general information only and cannot be regarded as legal, financial or accounting advice as it does not take into account your personal circumstances. For tailored advice, please contact us. PS - congratulations if you have read this far, you must love legal disclaimers or are a sucker for punishment.