Management-Rights "like" for own investment properties?

Hi experts,

Is it possible to set up a business similar to running a management rights business, with the
exception that it is managing investment properties owned by related entities of the business owner
and those properties are not part of a complex or building?

Any legislation and/or restrictions around running such a business?

Thanks,
FXD

 

To achieve what?

 

Running it as a legit business and able to moneytise all the time & efforts spent on managing
the IPs. I imagine investors with large portfolio will set themselves up that way?

 

real estate agency?

 

Yes and no.

Yes in way of being a joint managing agent with existing PM, but doing mostly activities that
normal PM don't/can't do, eg: account keeping, tax & budget planning, running costs review & handling of (such as insurance, utilities providers, essential services providers etc). I have in the
past used a joint managing agent arrangement on shared commission basis where one is my
PMs' manager with whom all PMs liaise except he doesn't do anything involving account keeping
or tax/budget planning activities.

No in the sense of it being not a full licensed PM who also manages others' IP. I am only
interested in managing my own, which I believe requires a less stringent license or certification
requirement as a normal PM? And really I have no interest in becoming a full license RE agent.

Thanks,
FXD

 

How can you pay yourself?

 

That one of many questions with this post I'd like to find an answer for. Can this be set up
correctly and legit as a biz where the fees will be paid out of IP rents or the holding entity?

This all came about when I discussed with my accountant the amount of time & effort spent on
the IPs and questioning how to best capture & account for them legitimately. He gave an example
of his client running a student accommodation building of couple dozens of units as a
management rights biz. I've merely modified the type of properties as individual ones not part of a
same building to query if this may be set up in similar way running a MR biz.

Thanks,
FXD

 

How many properties are you talking about? What sort of time does this take up?

You may need to separate yourself from your properties ie you will require a separate entity as you can't be an agent for yourself nor can you charge yourself for doing your own work (AFAIK).

 

Assume you could set up something arms length. You pay a management company. Deduction to person, taxable income to the company. Wheres the benefit? You cant sell the management company.

Something managing a student accom building cam be sold separately. Something managing a few of your personal ips?

 

Swings and roundabouts for yourself, potentially spread income across multiple entities to avoid paying GST/quarterly BAS's but no benefit just headache. Generally, creating and selling the 'rights to a development is like the icing on the cake for the developer. They get money for nothing essentially and the new owners are left paying for the privilege.

 

So you want to pay yourself?

Just suppose you COULD claim it as a deduction, but then you would have to declare it as income.

It would be a neutral result.

 

Property investment is passive investment income and not a business. To establish a company etc and self manage properties that you / related parties own I ask - why ? If its to engineer a inflated tax benefit but impacting profits its a Part IVA issue. If there is no benefit why do it ? If there is a benefit I question same.

eg Setup co and it manages and charges fees to the owners (you and wife).

Its a sham. Its not likely licensed under state law. Would involve statutory costs like insurances etc.

If the company were licensed and offers services to public then yes arsm length pricing may be allowed as a property outgoing. But there could be a GST trap in this. eg Company charges GST on repair costs for example. The property owner cant claim GST paid. The company must pay GST to the ATO so 9% of costs could be an ATO benefit. Property owners may be detrimentally affected with higher costs

re student accom. If the person OWNED the student accom then the extra costs for admin services may be denied. How can a owner contract and pay themselves ?