Management rights

[fredo]

From: Frank Modrich


I know you will say you are buying and income but does anyone have experience with them I believe you could work a complex say 30 + villas and get 50K per annum split for tax purposes

 

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Reply: 1
From: Scott Elsom


Frank,

I have looked into this...but from the point of view of the seller of management rights not the buyer.

We have a caravan park which is being transformed into a Over 50's retirement village. It will contain about 90 villas. If you bought the management rights off me for say $200K you would end up with about $100K in income. The business would still give me about $100K each year and I would still own the property...the banks will lend me $'s secured against the property and/or the business.

It is an extremely attractive option, from the owners point of view. As a buyer.... I think you'd have to be nuts to do it! All you are doing is buying yourself a job...you aren't buying an asset that you can borrow against...the banks won't lend you $'s for the purchase...it's just a job, that you have paid for.

This is probably a bit harsh, but that's what I reckon.

You can buy some management rights from me in about 24 months if you want

Scott

 

[fredo]

Reply: 1.1
From: Fredo J


The ones I,m looking at you buy the managers unit freeholds and own that outright
You then borrow the remainder to purchase the business which will has tax deductions on the interest