What Are Management Rights?

Management Rights is the business of providing caretaking and letting services within an accommodation complex. In Queensland the vast majority of apartment buildings servicing both the short term holiday rental market and the permanent rental market are operated by the owner of the Management Rights who has purchased the right to operate the letting of apartments within the complex – this is the business.

In addition, the purchaser of the ‘rights’ is required to live in the complex and purchase the unit which has been set aside for this express purpose. The Manager’s accommodation will have an office either attached or associated with the manager’s unit, from which the business will operate – the real estate component.

The manager is required to provide the daily caretaking and maintenance duties of the common areas of the complex for which he is paid a salary by the Body Corporate. The salary is paid monthly in arrears regardless of the trading activity of the complex and is adjusted upwards, compounding each year in line with the Brisbane Consumer Price Index.

It is because of this consistent and reliable salary that banks are keen to lend on the purchase of Management Rights and one of the many reasons why Management Rights are often described as ‘Blue Chip Businesses’.

Other points to support this definition are:

• No Working Capital Requirement: You are paid your Body Corporate salary at the end of each month.
• No Bad Debts: Any monies owing to you by owners of units that you let on their behalf, is deducted by you from rentals collected before it is paid to the owners.
• No Stock: Apart from cleaning materials and guest supplies used when cleaning apartments, there is no further stock required.
• Security: Tenure is secured by a Management Agreement between the Body Corporate and the manager. As time reduces the term,it may be extended with Body Corporate approval for a maximum of 5 years in any one year. No costs are involved in extending the length of the term.
• Lifestyle: Permanent let complexes offer considerable lifestyle opportunities while holiday let complexes will have seasonal changes allowing the manager ample low season vacation opportunities.
• Working From ‘Home’: Managers live on-site and their apartment is their home. This arrangement offers considerable economies in day to day living. Income from the business and savings from living expenses enable many managers to reduce their borrowings quickly.