The manager’s caretaking service fee is for all relevant duties such as cleaning, gardening, security and other necessary tasks. In some larger complexes, there’s enough work and the service fee is high enough to employ staff.
Beginners and Advance Guide to Buying Management Rights
Buying Management Rights
Management Rights provide a rewarding investment opportunity for efficient, well-organised people who enjoy a community environment and a well-structured business model. When you purchase Management Rights, you’re essentially buying the rights to provide caretaking or letting services within a community title (also known as a strata title) scheme.
What is Strata?
In property law it’s a concept that originated in Australia but has since taken off around the world. It allows for an individual or couple to own part of a property (such as a unit or apartment) while sharing the ownership of common areas like swimming pools, tennis courts, lifts and landscaped gardens. Properties with strata plans can be residential, commercial or a mixture of both. These properties can take a number of forms including suburban townhouse residential units, inner-city high-rise apartments and short-term resort/holiday stay apartments.
When you purchase Management Rights you generally purchase ownership of a unit and usage of an office and reception area. You’ll enter into a contract with the body corporate that specifies that you need to carry out certain caretaking duties and that you’ll be paid a contract service fee to do so. You’ll also enter into an agreement to provide letting services to owners of units within the complex, as a separate source of income.
Management Rights are an excellent investment choice for those with good people skills and a strong ability and willingness to manage other’s needs. For “people people” who are seeking an escape from the nine to five rat race, they’re the perfect fit.
How to Purchase Management Rights for the First Time?
Stage One
Find an Industry Management Rights Broker and Valuers with knowledge of the Australian Building Management Accreditation (ABMA) Code, such as (Brokers) Greg Jorgensen & Warren Oliver of “MR Sales”, Robert Collins & Alex Cook of “RAAS”, Celine Tseng of “Shine Realty” and Lee Ding of “Lee & Lee Associates” and (Valuers) Alison Sun of “Accom Valuers”. This Code is Australia and New Zealand’s guidebook for industry standards and best practice for common property.
Stage Two
Find a financier of Management Rights. How much you can borrow will depend on your ability to pay back the loan. However, it’s usually around 60-65% of the purchase price.
Stage Three
Find lawyers to assign Management Rights. Make sure that these lawyers have knowledge of the ABMA Code, such as John Mahoney of “Mahoney Lawyers”, Trent Pevy of “Pevy Lawyers”, Kenis Lay & Jasmin Ali of “Ebenezer Lawyers” and Sharon Flood of “Flood Legal”. These lawyers should be experienced in the field of Management Rights. Lawyers that lack ABMA Code and Body Corporate legislation experience are not the best option, regardless of how trustworthy you may consider them to be! Strata is a specialist field. For the best results, always engage Legal Counsel with knowledge of the ABMA Code.
Stage Four
Personal Performance – Receive direct training and assistance on the complete sale/transfer/assignment of Management Rights Interview process. Not unlike your lawyer, your trainer should have in-depth knowledge of the Body Corporate and Community Management Act & State Building Compliance Statutory Requirements (WH&S Act, QFES Act/Fire Compliance, Electrical Safety Act, Pool Safety Standards etc.), such as Strata Mastery. Making the right first impression is critical.
As a (new) business owner, gaining knowledge of the relevant body corporate acts and regulations is of course critical to your success now and in the future. A Strata Mastery trainer will not only provide you with building compliance and legislation training but also help to guide you through the Assignment process and provide you with a reliable “road-map” to win over and impress your prospective body corporate committee.
A Strata Mastery trainer may directly assist you with resume preparation, business proposal preparation, sourcing personal and professional references, conducting site inspections and even help you with interview questions and answers that are specific to your purchasing scheme! Often just knowing who to call can be the biggest hurdle.
Stage Five
Seek expert advice from ABMA Service Contractors or ABMA Qualified Body Corporate Managers, such as the Strata Management Group, Priback Body Corporate Management & The Community Co, for additional support and advice. Read further: Top Strata Managers in Queensland
Type of Management Rights
Resort / Holiday Management Rights
If you have a passion for the tourism industry, don’t mind a lot of people coming and going and want to work in a place with holiday vibes, resort management might be just what you’re looking for. In the sunshine state the holiday industry is booming and you have the opportunity to manage people who are relaxing on their getaway, and to help make their stay special.
Corporate Management Rights
Corporate Management Rights doesn’t mean working in an office building and working with employees of a corporation. Instead it refers to the corporate aspects of managing a strata title scheme. This makes it an excellent investment option for a business-minded person who knows how to work with other corporate/business owners (retail or commercial shop owners) and have a genuine interest, understanding and appreciation of good commercial business practices and day-to-day operational requirements.
Permanent Management Rights
As opposed to resort or holiday Management Rights, Permanent Rights refer to the typical residential or townhouse apartment-style setup in which the manager sources permanent or long-term tenants. One of the upsides of this kind of environment is the opportunity to get to know the locals who make up your community and work within a more stable or consistent residential environment.
Mixed Management Rights
For those who crave variety, mixed Management Rights keep things interesting with a mixture of short-term and long-term tenants and/or a mix of residential and commercial office/shop environment.
Student Accommodation Management Rights
If you like working among young people and don’t mind laying down the law every now and again, it can be very rewarding to manage these environments. Often they are modern, chic and located in urban environments where there’s plenty to see and do.
The Advantages of Buying Management Rights
- You may live onsite, so you can say goodbye to long commutes and heavy traffic.
- You can set your own work routine without having someone looking over your shoulder or micromanaging you.
- You can be your own boss, organising your day and the duties you undertake in a way that works for you.
- You have the capital gain of the unit and the business.
- The value of the business generally trends upwards over time.
- What you see is what you get and it’s written into the contract with no hidden terms. The money goes through a trust account and is audited so there’s no room for “cooking the books” or indulging in covert “dodgy” dealings.
- You have the power to update the financial books in an accurate fashion.
You won’t be defrauded. - You’ll receive a certification of next 12 months income stream by a specialist Management Rights accountant.
- You may choose to own and operate multiple sets of Management Rights at the one time.
The Disadvantages of Buying Management Rights
- Not all landlords get along in a complex-style environment. Tensions between owners and residents can create difficulties and takes skill to smooth over.
- You generally need to be a people person with good communication skills
- You run the potential risk of losing units from your letting pool. This will have an impact your income and the market value of your Management Rights business.
- Taking advice from an unqualified person can lead to massive headaches. Always ensure that you seek training and support from an ABMA Industry Accredited Practitioner to help keep any headaches at bay! Accurate knowledge is power. Follow the Link to Strata Mastery Service Directory of qualified service contractors and body corporate experts.
Management Rights Agreements
Your caretaking and letting agreements, will set out the rules regarding the day-to-day business of living in and running your strata title.
Caretaking Agreement
Put simply, this is the agreement that you’re paid a certain amount of remuneration to perform building maintenance duties deemed necessary in order to take care of the property. This doesn’t refer to the individual units but rather the common property areas that all owners and residents may use.
Letting Agreement
With the letting agreement, you essentially act as a real estate agent. You let out the units for rent on behalf of the investors / owners should the owners choose to allow it. You must enter into a separate contract, known as a letting agreement, with each owner. To be able to work as a letting agent you must possess the relevant licence for the state you live in.
Terms of Management Right Agreements
In Queensland there are five regulation modules that apply to body corporate. Two of the most common are standard modules and accommodation modules. Standard modules are highly regulated and suitable for schemes where owners live in their lots. Accommodation modules are less regulated and more suitable for schemes where owners rent their lots. Your ABMA Industry Accredited Training Supplier (Strata Mastery) will help you to gain an understanding of the differences between each module type and how the module type can impact on your purchase.
What is a Module?
Regulation modules are sets of rules that body corporates need to follow. Although they’re set by the developer of the scheme, the body corporate can later change the module if they decide that another one is more appropriate.
Management Rights Income Source
A body corporate pays the manager an annual service fee for building caretaking duties. However, Management Rights also present the opportunity for the manager to derive income from other sources.
Other Management Rights Income
Income can also be generated from:
- Commissions from letting the apartments
- Re-letting fees
- Cleaning charges after guests or tenants leave
- Supplying linen to new tenants
- PABX or equipment hire
- Sales of local tours
Purchasing Management Rights for the First Time
Finding a Management Rights Broker
First time buyers who are looking to buy Management Rights will typically go through an existing industry Management Rights broker.
Recommended Management Rights Broker
HIGHLY RECOMMENDED:
- Greg Jorgensen & Warren Oliver of “MR Sales”
- Robert Collins & Alex Cook of “RAAS”
- Celine Tseng of “Shine Realty”
- Gareth Closter of “Resort Brokers Australia”
- Bo Bo Qi of “Property Bridge”
- Lee Xue Ding of “Lee & Lee Associates”
ALSO RECOMMENDED:
- Australian Resort Management Sales
- Accom Properties
- The Onsite Manager
- CRE Brokers
- Commercial Real Estate
- Next Business and Property Sales
- RCA
Management Rights Contract (CONTRACT OF SALE)
- Proof & verification of previous 12 months net trading profit.
- The net profit is derived as an amount excluding personal borrowings or tax.
- Verification check is undertaken by a recognised Management Rights Industry accountant.
- Subject to due diligence by a recognised Industry Lawyer.
- Subject to finance approval by a recognised Industry Lending Institutions.
- Settlement – after completion of the above can take on average 60 – 90 days.
Buying Management Rights can be Separated Into Two Core Components
Real Estate and Associated Office
Most Real Estates apply a small premium. You are purchasing the only Real Estate that can operate a business from within that Strata.
The Management Rights Business
This is the purchasing of the actual business entity itself that owns the Management Rights.
How Much Does It Cost You To Buy Management Rights
The value of the Management Rights Business is calculated based on market demand using a multiplier of 3.0 – 5.5 times the years return. This can be more or less dependant upon net profit, length of agreements, location, supply and demand of the local market.
Purchase of Management Rights Example 1
Real Estate – Managers Unit $500,000
Net Profit – $400,000 x 5.0 = $2,000,000
Total Price – $2,500,000
Purchase of Management Rights Example 2
Real Estate – Managers Unit $250,000
Net Profit – $80,000 x 3.5 = $280,000
Total Price – $530,000
How Much Can I Borrow?
The amount you will be allowed to borrow will be dependant upon your current financial situation and ability to service a loan, normally you can borrow up to 60-65% of the Management Rights purchase cost.
Buying Management Rights
Buying the right kind of Management Rights isn’t always an easy decision to make or one to be taken lightly. Fortunately by educating yourself and listening to the advice of the experts you can set yourself up with a very stable investment from now until far into the future.
Top 10 Tips On Buying Into Management Rights
- Get professional advice.
- Educate yourself as much as possible.
- Understand what you are buying.
- Know the term of agreements.
- Understand the by-laws.
- Use the correct business structure.
- Understand what the body corporate is like.
- Make sure you have the necessary skills.
- Obtain your license.
Buying Management Rights Training Courses
Strata Mastery Courses
Customised to meet the unique requirements of each individual and their particular scheme, our Strata Mastery Workshops are certainly no one-size-fits-all program. With our helpful team using up-to-date teaching materials and focusing on current issues in Management Rights, you’ll be well-equipped to enter into that world for yourself when you take charge of your own scheme.
Complete 3 Day Strata Mastery Buying Management Rights Course
If you really want to master Management Rights and walk away with expert-level knowledge, we recommend the three-day Strata Mastery course. Over the course of three days you’ll learn all you need to know and more about purchasing your own Management Rights and taking care of your own scheme. You’ll be so well-equipped with knowledge that you’ll be practically ready to start teaching others.
Buying Management Rights For The First Time - ``New Entrant`` Training Program
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Day One
Introduction to the Australian Building Management (“ABMA”) Code Training Program – Students are provided an introduction to Body Corporate Building Compliance and Work Health and Safety requirements specific to our country or state (QLD) and specific to bodies corporate. Students also complete the Strata Mastery – ABMA Code Utilisation & Code of Conduct Training Program which applies the theories within the ABMA Code to your specific Caretaking Contract “Schedule of Duties”.
Upon completion of the course students will receive a “Certificate of Participation and lifetime “Strata Mastery” subscription membership. Training includes –
- New Building Establishment Requirement at the First General Meeting of the Body Corporate
- Hand-over & Induction Requirements of Newly Appointed Caretakers
- Building Classifications
- Essential Services (Gas, Water, Electricity Sewerage Infrastructure)
- Fire Protection Services
- Non Essential Services (Air Conditioning)
- Soft Services – Cleaning & Waste Removal
- Soft Services – Gardening
- Recreational Areas – (Theatre, Playground, BBQ Area)
- Swimming Pools & Spas
- Minor Works (Caretaker Versus Body Corporate Responsibilities)
- Work Place Health & Safety Compliance
- Requirements (Body Corporate Versus Service Contractor Versus Caretaker Responsibilities)
- Code of Conduct
- Performance Management
- Project Management (When should the Body Corporate Engage an Independent Project Manager)
- Landlords & Tenants Compliance & Maintenance Responsibilities
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Day Two
Body Corporate Best Practice Training Program – Students are provided an Introduction to the Body Corporate & Community Management Act and associated Regulation Module/s (specific to each scheme/site) to comply with the Committee/Caretaker/Body Corporate Manager “Code of Conduct”.
- Introduction to the BCCMA97 – “Code of Conduct” for Body Corporate Managers/Caretakers/Committee Members
- Understanding Your Scheme Profile (Module Type, Class Type, Rise Type) & Distinguishing The Key Components of Legislation That A Relevant To Your Scheme
- Understanding The Roles And Responsibilities of Committee Members (Chairperson, Secretary, Treasurer, Ordinary Members, Body Corporate Manager & Building Manager/Caretaker)
- Body Corporate & Caretaker Spending Limits & Authorities – How When, Where & Why Body Corporate Funds May Be Expended?
- Essential Building Management Tools (Identifying & Reviewing Key Documents – Community Management Statement, Sinking Fund Forecast, Insurance Policy)
- Body Corporate By-Law Breach – Caretaker Versus Committee Obligations, Process & procedures
- Committee Meeting Versus General Meeting Operational & Legislative Requirements
- Building Maintenance – Lot Owner Versus Body Corporate Responsibility
- Letting Versus Caretaking Responsibilities – When Should The Body Corporate Be Informed
- Power To Enter Lots & Emergency Expenditure By The Body Corporate
- Understand the Body Corporate Insurance Claim Process & Procedure
- Building Management Plan + Annual Administration & Sinking Fund Budget Preparation Requirements
- Understanding The Body Corporate Financial Year Cycle & Learning How To Maximise This Knowledge To Your Advantage
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Day Three
Caretaker Performance Management Audit Training Program – Students undertake a “Mock” Caretaker Performance Management Compliance Audit, without the fear of penalties or infringement notices. Training provided is strictly confidential and for the sole benefit and use of students. Don’t leave the management of your scheme to chance! Ensure that all your caretaking compliance obligations are met, in the event of a potential internal conflict or dispute. Remove all confusion, frustrations or concerns and sleep easy knowing you have confidently fulfilled your individual compliance obligations well ahead of time!
- “Mock” Caretaker Performance Management Audit – Common Property and Desktop Inspection
- Regulatory Compliance Via Self Assessment, in accordance with the ABMA Code
- How to Prepare a Body Corporate Common Property Conditions Report
- How to Prepare a Building Manager’s Report
Optional Extra Modules:
- How to Prepare a Body Corporate Body Corporate Annual Budget for Committee Consideration
- How to Prepare Motions for a Committee Meeting
- How to Prepare Monthly Community Newsletters
Strata Mastery - Assignment of Management Rights Training Program
Caretaker Performance Management Audit Training Program – Students undertake a “Mock” Caretaker Performance Management Compliance Audit, without the fear of penalties or infringement notices. Training provided is strictly confidential and for the sole benefit and use of students. Don’t leave the management of your scheme to chance! Ensure that all your caretaking compliance obligations are met, in the event of a potential internal conflict or dispute. Remove all confusion, frustrations or concerns and sleep easy knowing you have confidently fulfilled your individual compliance obligations well ahead of time!
- “Mock” Caretaker Performance Management Audit – Common Property and Desktop Inspection
- Regulatory Compliance Via Self Assessment, in accordance with the ABMA Code
- How to Prepare a Body Corporate Common Property Conditions Report
- How to Prepare a Building Manager’s Report
Optional Extra Modules:
- How to Prepare a Body Corporate Body Corporate Annual Budget for Committee Consideration
- How to Prepare Motions for a Committee Meeting
- How to Prepare Monthly Community Newsletters
Buying Management Rights Training Available By Strata Mastery
Where To Find Management Rights For Sale?
Online Websites
You can find Management Rights for sale in Australia by going online and browsing websites like:
Commercial Real Estate Websites
Additionally, you can purchase through a Management Rights broker. See the section ‘Buying Management Rights’ and ‘Purchasing Management Rights For the First Time’ sections above.