Buying management rights

Discussion in 'Property Investment - Other' started by Wazza007, 28th Jan, 2005.

  1. Wazza007

    Wazza007 Member

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    Hi

    Ive probably posted this in the wrong section but I am after general advice.

    My wife and I have been considering purchasing management rights in a block of units or a complex. I have seen a few advertised but being new to this Im not sure where we can go to find further advice - besides our accountant.

    Has anyone done this? and can anyone recommend a site or another information source for education + Cons/Pros?
     
  2. shazza

    shazza Member

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    The price you pay will depend on how large the complex is - some go for up to $1M or over here in Queensland.
    In Qld you have to complete a course run thru REIQ and some other RE trainers so you are licenced to act as a PM - cost about $1000 and quite easy by all accounts.
    I think the banks regard lending as commercial and normally only offer 60-70% on loans.
    The complex where we have a townhouse (43 townhouses) came up for sale about a year ago for about $750k with the managers earning about $60k per annum. So you are essentially buying your own job.
    But really its not so much about do you have the funds rather are you suited to it. Can you put up with 40 or so tenants knowing exactly where you live and dealing with enquiries 24/7? Organising holidays is also challenging because you need relief managers to come in.
    Need also to look at the mix of tenants to owners in the complex. You earn more with more tenants but then you normally have more work and hassles then the owners who normally care about their units/townhouses.
    In newer complexes be prepared to stay at least a couple of years or you could be charged an exit tax (we got our former incompenent manager - nice addition to the body corp).

    Hope this helps.
    cheers Sharyn
     
    quiggles likes this.
  3. Wazza007

    Wazza007 Member

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    Hi Shazza

    thanks for the info, we are looking in QLD so I'll look for information on the real estate course.

    These deals would look even better if you could purchase the managers unit through SMSF because its a place of business....dreaming :)

    Thanks
     
  4. Michael Yardney

    Michael Yardney Member

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    Last edited: 30th Jan, 2005
  5. Wazza007

    Wazza007 Member

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    Thanks Michael

    Thats a great site I'll give them a ring
     
  6. Dos

    Dos Member

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    Hi all,

    Shazza is pretty spot on here Waz! My parents have recently taken one of these on board and the beauty of theirs is the sources of income. As Shazza mentioned, they recieve a body corporate paid salary as well as commission from around 90% of the units. In a 50 unit complex, that is a lot of commission! When they were looking, one of the highest criteria's was the percentage of owner occupiers. They found that the fewer there was the better. The main reason for this was that although they may look after the unit better than a tenant, they are always around and want to know everything that is happening. An tenant is simply paying to live there and don't have too many concerns. Keeping the owners at length and updating them very regularly seems to keep the troops happy.

    In regards to hours the office etc is open, they have really set the bar and don't deviate. The office is open on X days between x and x. The front door to the house remains closed at all other times (office is next to house). Once people know the "rules" it is no hassle. The old fella was in "what seemed" a highly stressful IT job and is now fulltime at the complex. He wanders around most of the time and has around 2 days full gardening to do each week. The pool also keeps him very occupied.

    This is in a very nice complex too which attracts quality tenants.

    Dos
     
  7. Wazza007

    Wazza007 Member

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    Thanks DOS

    great info, I have also found a couple of great sites for onsite management rights, how to work out a good for selling buying etc price = yearly income x 3.5 -5x plus the property itself.



    We are looking as we will be moving North next year, I will transfer with work so we are looking for a small complex that my wife could manage 20 - 30 T/houses with at least a 70-30 split renatl - owners.