What are Management Rights?
Management Rights businesses offer a unique property management opportunity for the investor combined with a popular lifestyle choice of working from home.
The management rights operator has a number of distinct advantages over other commercial/retail businesses. These include:-
- Work from home with no travel time, thus improving quality of time with family.
- No stock to buy or hold waiting for a sale.
- Guaranteed income from the Body Corporate- no matter how occupancies are going.
- Advertising and marketing paid by your clients, not you the operator.
- Limited exposure of bad debts as guests usually pay upfront.
- Proven industry in regard to high profitability and sound resale values.
- Due to high profitability and very low failure rates Banks are most keen to lend.
- Ideal first business opportunity as no specific business skills are needed.
- Limited Legislative restrictions/limitations.
The basic principals of running Management Rights are the combination of three key components.
1. Caretaking Agreement
This is a legal agreement between the operator (Resident Unit Manager) and the Body Corporate and will provide a specific list of duties that the manager must perform and how often on behalf of the Body Corporate.
Examples of some of the duties that may be required are:-
- Cleaning and checking the chemical balance of the pool on a daily basis.
- Cleaning of the BBQ on a daily basis.
- Formal checking and cleaning of the common property of the complex. (Stairwell lifts paths etc.)
- Taking rubbish bins out for collection.
- Maintaining certain office hours.
- Obtain quotes followed by supervision of work done by outside contractors on behalf of the Body Corporate.
- Prepare various reports for attending committee meetings.
Agreements can be for terms up to 25 years and are subject to two modules depending on the complex.
- Standard Module:
- Has maximum term of 10 years inclusive of options.
- Accommodation Module:
- Has a maximum term of 25 years inclusive of options.
2. Letting Agreement
This is a legal agreement between the operator (Resident Unit Manager) and the Body Corporate and allows the manager to undertake letting duties on behalf of the unit owners.
The Letting Pool is the number of unit owners who have given their units to the manger to manage on their behalf.
3. Managers Unit
The manager in the majority of cases must own a unit and reside on the premises in line with the above two agreements.
Managers unit also incorporates an office to conduct the business.
Office can either be on title to the managers unit or linked by exclusive use arrangements with the Body Corporate.
All resident managers in Queensland must hold a Resident Letting Agents License.
Legislative requirements for the industry are covered by the "Property Occupation Act" and are administrated by The Office of Fair Trading.
Full details of requirements and license application forms, can be found on the website for the Office of Fair Trading.
The Office of Fair Trading will require the applicant for a Resident Letting Agents License to complete an accredited course.
In Queensland, the REIQ and TAFE Colleges offer accredited courses for the license qualifications and course duration is usually one week on a face to face class basis.
If attendance to a course does not suit your personal circumstances both training centres offer an accredited course by distance learning, with access to lecturers and advisors by phone or internet.
For more comprehensive details on licensing requirements visit http://www.arama.com.au and following the licks to Licensing.
For course details and costs please check the following websites:
"I would recommend Barry to anyone wanting to enter management rights and needing the services of a finance broker. He offers a professional service based on strong industry knowledge and experience but more than that, works with his clients to build a long term professional relationship based on client success."
Shona Jones - Offshore Noosa Resort