DanielManagement rights are often unaware of many. People don't know what it is. How does it work out? Or what are the types? With this guide, you will understand what management rights are and how they work out.
What are Management Rights?
Management rights can be described as a term used for the on-site management business of a unit complex. It includes three basic elements:
Caretaking Agreement –
Caretaking of the property on behalf of a body corporate (i.e. Gardens, pool, lifts, etc.)
Letting Agreement –
An agreement between the manager and the individual owners that permits the manager to be the only one on-site person to conduct business.
Managers Unit –
The ownership of a real estate in a community titles scheme (Includes an office or has the exclusive rights to use of an office)
These elements have several variations. Sometimes, management rights in Gold Coast do not include real estate; some include only caretaking and letting. Therefore, it is crucial to understand what you are buying, before making any investments.
How Do Management Rights Work?
To provide long-term caretaking of the common areas of complex units such as pool, garden, lifts, etc developers appoint a Resident Unit Manager (RUM). Usually, caretakers are provided a basic salary but the amount can increase in subsequent years through state CPI adjustment.
The base salary and all the details are further disclosed in the caretaking agreement made between you and the body corporate. The manager also enters into a letting agreement where the body corporate grants you the sole right to operate the business within the complex.
Types of Management Rights
There are many different types of management rights available, including:
1) Holiday Letting
Holiday lets are short term let units; they are only for operating resorts or hotels. The complex unit must be promoted to attract holidaymakers to stay for short to medium stays. One of the best advantages of holiday letting is a great investment return. This is because the manager makes money from rent collection, service charges, linen hire, and commission from ticket sales. This type of letting requires the manager to stay up-to-date (Staying open for longer hours, Operating the business 7 days per week) and provide information on local activities. Since the idea is to attract people to stay during peak and off-peak season, marketing and promotion are important.
2) Residential Letting:
Residential letting, also known and Permanent letting, involves searching for tenants, collecting rent, looking after the unit complex, and building a good relationship with business owners. It offers a more steady income source. Compared to holiday letting, less marketing is required in residential letting. But the rate of returns is generally low than holiday letting.
3) Corporate Letting:
This type of management right is practiced by businesses located in major cities and towns, this kind of business is similar to holiday accommodation. It is in the form of rent between a long term lease and short time rent, that is specially dedicated for tourists. Corporate letting allows the company to rent the property from landlords, administers it, and again lets it to other employees on short term and long term bases. Hence, there is only one tenant that pays the monthly fixed rent to the landlord. To maintain a high level of occupancy, marketing plays a huge role.
Need advice related to property valuation on Gold coast?
Australian Valuers are a team of certified valuers who are specialised in their valuation field of choice, which enables them to provide their clients with accurate advice. All valuers in the Australian Valuers office are members of the Australian Property Institute and are registered with the Queensland Valuers Registration Board. They provide a wide range of valuation services and consultancy advice related to Management Rights, Motels, and Fair Value.
To know more about their services, visit Australianvaluers.com.au
