They are safe, secure, proven businesses that involve overseeing the maintenance and leasing of properties within an apartment or townhouse complex. Most complexes also provide a unit or townhouse for an onsite manager as part of the purchase price for the Management Rights.
Historically, Management Rights produce great returns on investment, providing the owner of Management Rights with both a home and a high-income business they can run from that home.
A resident manager buys management rights to provide, for a yearly salary, the long term caretaking of the common areas such as pools and gardens. The resident manager also enters into a letting agreement in which the Body Corporate grants them the sole right to operate a permanent and/or holiday letting business from within the complex on commission.
Management Rights began in the 1960s when strata title apartments were developed on the Gold Coast to cope with a huge tourism boom generated by low cost airfares.
The concept then grew to the Sunshine Coast, which had a new airport, and then other areas including Cairns, Townsville and Hamilton Island.
Developers of holiday apartments realised that they could sell Management and Letting Rights to their buildings as cream on their development. They could sell the apartments at a very reasonable price, and they would then be looked after by an onsite manager earning a very good income.
It was a wonderful business model for everyone involved – the owner, manager and tenants, and Management Rights remain great businesses.
Legislation protects the industry. That’s part of the reason banks like management rights. They see it as one of the least risky businesses to be in, which is why they lend up to 65 per cent against the goodwill.
Managers are also motivated to work hard because they own such a large stake in their business. It’s the cornerstone that makes the industry so good.
The income of a Management Rights owner is under pinned by a salary from the Body Corporate which is guaranteed and unlike so many other businesses there are very low overheads. You don’t have to buy equipment or stock, and generally there is not a lot of staff to be managed either. You might have to buy a mower and blower but some managers even outsource that work along with the cleaning.
Because buyers need at least one third of the purchase price, the businesses usually attract mature individuals with some life skills and experiences, and who have been financially successful. That is another reason why the businesses are so successful.
As well as the salary for caretaking of the property and the commission from renting out the units, a real estate licence gives Management Rights holders the opportunity to make large commissions by selling units in the complex.
Holiday letting properties also provide additional income opportunities through:
- Unit Cleaning: The Management Rights holder can run their own cleaning business and make a profit.
- Linen Hire: You own the linen, and charge hire and laundering fees to the owner for each holiday stay.
- Commissions: On such things as tour bookings and car hire.
- Unit Maintenance: From changing light bulbs to fixing blinds, locks etc.
- Vending machines: For drinks, snacks, toiletries and other items.
- Holiday Hire: Bodyboards, tennis balls, cots, high-chairs, beach umbrellas etc.
Pretty much. Over half of our clients are newcomers to the industry. We have clients who have been builders, bankers, teachers, policemen, nurses, salespeople, corporate chiefs, public servants, moteliers, farmers, and many more. Despite differing backgrounds, they all share a desire for a secure change of lifestyle. They also don’t have to drive to work.
Management Rights operators need a measure of diplomacy and people skills, but everyone has life experience and no matter their background that life experience can translate to the industry very well. There are many different personalities in a unit complex, be they owners, tenants or tourists, and you will also have to negotiate with workers such as cleaners, receptionists and tradespeople. You will also need a good working relationship with the unit owners. And if you’re a married team taking on management rights, you’ll need a good working relationship with your partner.
As you will be collecting money on behalf of others (unit owners) you must obtain a Resident Letting Agents Licence, which only involves a short course. Our recommendation is to obtain a full real estate licence which provides additional strings to the income bow, including being able to sell units in a complex to protect the letting pool. RMS can help clients with course details – even homework if required! None of our clients have ever failed.
Industry bodies such as ARAMA and publications such as Resort News can help with advertising and marketing services. The technology for Management Rights businesses are now designed for people without any technological skills. If you can use a mobile phone you can use all the software you’ll ever need in Management Rights.