Management Rights, QLD - Advice

I am interested to hear from anyone who has had experiance with investing in management rights of multi-dwelling complexes in QLD. On site manager - management rights. Whether it be retirement complexes, holiday, permanent, holiday/short stay etc. Pros and cons of the different types? I have begun investigating the potential investment of purchasing management rights to a complex and assigning an on site manager to look after the complex.

What is a decent roi for this type of investment? I have seen rights offering returns ranging from 8-20% on Search Results
On the surface, some of the returns look almost unbelievable.

I've heard the sweet spot for top ROI is 1.3-2.2mil. Thoughts?

What are the pro's and cons?

What should I look out for?

I live in Sydney and am not interested in running the day to day activites of this type of investment.

Cheers

James

 

This is more of a business investment rather than property. You are essentially buying a PM business (the value is placed on the commissions) so experience would be needed in that regard, but obviously the other aspect to building management apply too.

I don't think it's the type of passive investment you would be looking for but maybe check on some business forums? Sorry I can't be of more help.

 

Thanks Andrew.

Anyone with experience in this game?

 

Some info here

Management Rights; sounds like a nice semi-retirement gig

 

I have a lot of experience in this, and in different capacity. Your question is really broad and I'd have to write many pages to answer. But to stay as a pure investor, you really need to run a huge one to reap the benefits of economics of scale. In China I heard of MR for a thousand over properties!

Know what you want and don't want to get into, how much capital outlay/time/skills you have... Remember, no two MRs are the same. In Qld, they use the term Multiplier. Its also good to be familiar with Body Corp rules.

 

Hi James, hard to run these staffed without a massive rental pool, anything with a income of under $200k is basically buying yourself a job. Unless of course you have the cash to purchase and wont need to worry about paying the bank back.
ROI- the problem with the net income figures quoted is there are always a lot of Add back's and you will find you will also have those same expenses so the net income wont be that great.
The multipliers are up over 4 at the moment so are quiet expensive to purchase.
One of the most important things to check is how long is there to go on the agreement, you really want something with more than 15 years left to run.... crucial if you need bank finance

 

Hi James, I'm a QLD body corporate manager.

The comment about not being interested in running the day to day is concerning, as that's the fundamental responsibility of a caretaking service provider (as they're called in QLD). Many contracts allow the caretaker to subcontract the work, however most also require 24 hour contact persons, emergency response at all hours to site etc, supervision of other contractors (e.g. fire), attending meetings, providing reports etc. Those things are almost impossible to subcontract well.

Perhaps look at a partnership/company where another person does the day to day running and you provide the cash.

If your aim is to buy the business and then hire a cleaner and gardener, those arrangements quite often result in big problems. For a site where the manager is paid $100K+, the committee want to be dealing daily with a business owner and decision maker, not a subcontractor (and rightfully so I think),

Matt