Tips For Selling Your Management Rights Tips For Selling Your Management Rights Tips For Selling Your Management Rights Purchasing your Management Rights business involved hurdles, demands, various people to deal with, get paperwork to and more. Now that you have made the decision to sell, TIME IS ON YOUR SIDE, so rational and structured planning is required leading up to listing day. The following are tips from we as Management Rights Valuers and me personally as a Management Rights Owner: Engage a Management Rights Specialist Accountant to conduct a Verification of your business income and expenses. Consider getting independent advice from a Management Rights Valuer on the Managers Real Estate and/orthe Business. If necessary get your Caretaking and Letting Agreements topped up. If you are under a Standard Module (10 year maximum terms) ensure they are at 10 years. Review your PAMD Form 20a documents. Check for all signatures from Landlords Check for your signature as Agent Check for the ticked assignment ability Ensure all PAMD forms are of a recent version ie as long as it contains the assignment clause, currently Clause 4.4. Ideally you will have all historical Vendor/Purchaser transfer documents. At worst ensure that you have the one reflecting the transfer to yourself. Provide any and all Deeds of Variation to your Caretaking and Letting Agreements. Create your own Investment Report and Documents Package, containing certificates of titles, Agreements, Community Management Statements, Verification Report, Survey Plans etc. In conjunction with your Agent, make it neat, factual, include pictures of the complex and have copies on hand for yourself and your Agent. This document should contain a story about your business, for example: Green Hedge is now 6 years...
The Manager’s Real Estate The Manager’s Real Estate The Manager’s Real Estate In general terms, the common real estate components of a management rights sale can include the manager’s unit, a separate office-reception area, storage or linen rooms and car spaces. It is often the case however that there is a combined manager’s unit and office on a single certificate of title, although it is fair to say that the larger the complex, the larger the real estate component. This Real Estate that forms part of a management rights business is, broadly speaking, directly linked to the Caretaking and Letting Agreements. These two documents, despite various titles eg Caretaking Contract or Letting Agents Service Agreement etc, generally (but not always) state or identify the manager’s lot. Here are two examples: “Caretaker’s Unit” the Lot in the Scheme that is owner or occupied by the Caretaker, that is Lot 1 in SP123456. “Manager’s Office” means that part of the Manager’s Lot which is used as an office for the Caretaking Business. Note that in the second example, the Manager’s not clearly identified. In the valuation assessment of the manager’s real estate, regard has to be had to the most recent sales within the complex together with the last sale, if appropriate, of the manager’s unit. We also consider recent sales of manager’s units within comparable...
Tips for selling your Management & Letting Rights business (MLR) Tips for selling your Management & Letting Rights business (MLR) Here are a few tips when selling your MLR business for a smoother sale process; Get a Profit & Loss statement ‘For Sale purposes’ by an MLR specialist Accountant. We can provide a list of Accountants working in the industry who can assist. Review your PAMD Form 20as and/or POA Form 6s. Check that all letting appointments are signed and are with the current owner of the Lot; Are ‘Assignments’ executed? – Assignment Clause initialed and box ticked whether the Client ‘Agrees’ or ‘Disagrees’, the new POA Form 6 assignment is automatic. Get your Caretaking & Letting Agreements ‘topped up’ either at the AGM (costs borne by the Body Corp) or EGM (costs borne by the Manager) Get a valuation for Pre-Sale advice on the Managers Lot and/or MLR business to establish any offers received are realistic. Call Brisbane office on 1800-664094. Any other questions? Feel free to contact Alison Sun, Alex McCowan or Claudine Overton from the Australian Valuers MLR specialist Valuers...
Leaseback Income and how to consider it. It is in these harder economic times that leaseback agreements are perceived to be an area within the business that has the greatest risk, particularly as occupancies fall and tariffs recede. The agreed leasebac rental payout to the Landlord by the manager does not change, despite the above. Valuers of Management Rights generally utilise one of two methods when dealing with Leaseback Income being the application of a simple multiplier to the Net Operating Profit arising from Leaseback Income to a more detailed ‘What If’ Analysis. Scenario: A predominantly permanent complex of 215 townhouses with 160 in the letting pool (140 permanent & 20 holiday let). The first steps within the ‘What If’ Analysis is to assume that the 20 Leaseback/Holiday Let units form part of the standard Form 20a Permanent let units. The then ‘standard’ letting commission, cleaning/linen and consumables costs are added to the gross Leaseback Rents received to provide a grossed up income on this basis. However cleans/linen and consumables have an industry recognised hard cost to the manager/operator of about 50%, hence this cost is then deducted from the new gross income. This then results in a Traditional Net Operating Profit (TNOP) from this portion of the business. However what it does not identify is the Risk Component of the overall Leaseback Rents Received. Therefore the TNOP is deducted from the Verified Leaseback Profit to reflect the Risk Income component. The exercise has then produced two NOPs, one Traditional and one Risk. This is where two distinct multipliers are adopted. As an example we provide the following: Leaseback Rents Received $548,019 Commission $ 65,762 Cleans/Linen...
Management Rights Market Business Management Rights Market Business 26/10/12 The Management Rights market overall remains slow with a number of Management Rights business for sale and purchasers being selective on their purchase. The Brisbane CBD and Inner City corporate and short term letting market is strong with high occupancies and high tariffs. Most of these businesses are tightly held and in many cases, would command a premium if offered for sale. This has had the same flow on affect for the permanent letting market. The Brisbane inner region remains fairly active with strong interest for businesses with large Net Operating Profits, as they enabling the business to employ staff.The Brisbane outer region remain fairly active as an entry point for many ‘Mum and Dad’ purchasers buying themselves a job. The Gold Coast market remains tough with low occupancies, high levels of competition and a number of Management Rights businesses under the control of Receivers & Managers currently for sale, until these businesses are subsequently sold, it will take some time for the market to recover to the record multipliers achieved in 2007.  Permanent let complexes are in higher demand than Holiday Let complexes on the Gold Coast at this time. We do not perceive much change to this situation in the future. The achievable market value of the Management Rights business is heavily dependent on the location, the size of the Net Operating Profit, the length of Agreements, the ratio of the Managers Real Estate to the Management Rights business, the return on investment on the total purchase, the business offering plenty of upside, etc. We recommend our valuation services be engaged to provide an independent opinion...
Tips For Selling Your Management Rights Here are some helpful tips when it comes time to sell your Management Rights. This “To Do” list ensures rational and structured planning prior to listing day. To print out a handy copy of this list click this link: Management Rights To Do List. To Do Notes Done Engage a Management Rights Specialist Accountant to conduct a Verification of your business income and expenses. Consider getting independent advice from a Management Rights Valuer on the Managers Real Estate and/or the Business. If needed get your Caretaking and Letting Agreements topped up.  If you’re under a Standard Module (10 year maximum terms) ensure they are at 10 years. Review your PAMD Form 20a documents. Check for all signatures from Landlords Check for your signature as Agent Check for the ticked assignment ability Ensure all PAMD forms are of a recent version ie as long as it contains the assignment clause, currently Clause 4.4. Ideally you will have all historical Vendor/Purchaser transfer documents. At worst ensure that you have the one reflecting the transfer to yourself. Provide any and all Deeds of Variation to your Caretaking and Letting Agreements. Create your own Investment Report and Documents Package, containing all relevant documents, certificates of titles, Agreements, Community Management Statements, Verification Report, Survey Plans etc.  In conjunction with your Agent, make it neat, factual, with pictures of the complex and have copies on hand for yourself and your Agent. This document should contain a story about your business, for example:  Green Hedge is now 6 years old, contains a total of 95 one, two and three bedroom apartments with 65 in the letting...