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    What are Management Rights?

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    Find out why this lucrative industry offers ‘lifestyle, security and high returns.'

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    Why use Management Rights Experts before buying or selling?

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    Want an honest and straight forward view of the positives and the negatives?

LOOKING FOR A CHANGE OF LIFESTYLE?

Find out why this lucrative industry, offering ‘lifestyle, security and high returns,’ is a unique business opportunity and how you and your family can secure your future, living a quality lifestyle.

Whilst a Management Rights business can offer attractive lifestyle alternatives, the purchase process can be littered with financial and legal pitfalls; this can be daunting for the first time buyer.

Our team of professionals pride themselves in delivering easy to understand layman term information on the industry. Our monthly seminars not only give you the tools to move forward confidently, they give you the professional team that know the pitfalls and how to save you from them.

Many potential owners are investing their life savings into a purchasing Management Rights businesses; the investment of three hours could be the best investment you will make in protecting and increasing your assets.

These events provide an excellent opportunity to personally approach our representatives and all speakers offer complimentary one-on-one interviews to seminar attendees.

UPCOMING EVENTS:

GOLD COAST SEMINAR

Management Rights Australia (MRA) holds regular information seminars throughout the year for people wishing to buy a management rights business.

Join one of our seminars today and let us help guide you through the Management Rights maze. Bookings are essential.

Eventbrite - Management Rights Australia Seminar: February 2019

REAL ESTATE AND THE SALEABILITY OF YOUR RIGHTS

The eastern States have experienced substantial increases in the value of real estate over the last couple of years. This increase in property values, however, is not such a great thing when it comes to selling your management rights.

The value of manager’s residential units in some areas (particularly those close to the beach or in the Sydney area) has increased to such an extent that it is becoming a liability to the saleability of the management rights.

The Problem

When investors look at purchasing management rights, they look at the total cost of the acquisition – ie the cost of the business plus the cost of the residence/office. Where real estate values have escalated substantially, the net return on the total investment can be significantly reduced and the proposed purchase is not as attractive as it is otherwise would have been.

Some management rights brokers have reported occasions recently where this reduced rate of return has led buyers to look elsewhere for businesses whilst they chase a better rate of return. Leasehold motels is a classic alternative – with no Owners Corporation to deal with, no real estate to purchase, no real estate licences and trust accounts required, a residence still on-site and long term security of tenure.

Minimise the problem

Unfortunately, options may be limited. If the reception/office is part of the title to your residential unit (or is an exclusive use allocation attaching to your residential unit) then you have no flexibility. The unit cannot be severed from the management rights.

In the Sydney area, however, many (if not most) of the reception/offices are held as separate freehold lots. Consequently, designated manager’s residential units are irrelevant to the operation of the management rights.

It is these types of complexes where there are some real options available.

Options

Your options are twofold:

1. If your Owners Corporation will allow it, sever the management unit completely from the management rights so that the management rights are attached only to the office lot; or

2. Sever the existing management unit from the management rights but provide that the manager must still reside in the complex. By doing this, the manager has the flexibility of either buying a cheaper (say) one bedroom unit in the complex or renting a two or three bedroom unit.

So what’s the better option?

I remain a firm believer that managers should at least reside in the complex they manage. It is difficult to argue that Owners Corporations should pay managers a caretaking fee (which may be substantially in excess of what independent tradespersons may charge for the same work) if the manager is not living on-site and effectively on call 24/7 in the case of an emergency. This is the ultimate (and unarguable) difference between on-site managers and Owner Corporation employed tradespersons.

As long as the manager resides in a unit in the complex, ownership of a unit should be irrelevant to the Owners Corporation.

Issues to consider

There are a couple of issues to consider.

Firstly, one of the prerequisites to obtain an On-Site Residential Property Manager’s licence in New South Wales is that the licensee’s principal place of residence must be situated in the complex and the licensee owns that principal place of residence. This licence, however, will soon become obsolete when changes are made to the licencing legislation.

I have previously expressed the view that On-Site Residential Property Managers should, in time, upgrade their licenses to full Real Estate Agent licences as it creates all sorts of flexibility from the manager’s point of view. It also gives the manager a potential new income stream in respect to selling lots in the complex. This process is not overly complex or time-consuming and will soon become mandated.

Secondly, a change may be required to the by-laws so as to delete reference to the particular nominated manager’s residential lot and to substitute a reference to “any lot occupied by the manager from time to time”.

Thirdly, the Caretaking Agreement will also need to be varied to delete reference to the nominated manager’s residential lot and again substitute a reference to “any lot occupied by the manager from time to time”.

CONCLUSION

Managers should consider their options as far as severing expensive residential management units from the management rights documentation and thereby provide flexibility, moving forward. This flexibility will make a future sale of the management rights more attractive in the marketplace.

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

 

Management Rights Articles

  • Changes Are Fast Coming for NSW Real Estate Licensing

    The Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 has now been passed by both Houses of the NSW Parliament. The accompanying Regulations are still being finalised and the new legislation is expected to come into effect in the latter part of this year (possibly October or November).

    ARAMA is continuing to push for relief for its members in the Regulations, so that when drafted, they will exempt onsite managers from having to hold a full real estate licence and/or a “Licensee in Charge” licence where they only intend to carry out letting in the complex that they manage.

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