User:Greg jorgensen/sandbox

MANAGEMENT & LETTING RIGHTS BUSINESSES & HOW THEY WORK

Management & Letting Rights businesses are unique to Australia and can be simply described as follows:-

These businesses allow the Owner/Operator, who commonly resides on-site, to gain an income from the provision of Caretaking Duties as outlined within the Caretaking Agreement (Contract) and additional income from the Property Management of units owned by Investors within the complex. Within Australia, under the Torrens Title System, are legal structures relating to apartment buildings known as a Body Corporate. Every strata titled building has their own Body Corporate and it is this entity that engages the building Manager via the Caretaking & Letting Agreements.

What Makes A Management Rights? It is generally the case that a Management & Letting Rights business only exists and is viable, were there are more than 30-40 units within the complex, where the building is used for long term rentals. However, in holiday/coastal regions, there are many examples of a Management & Letting Rights business where there are less than 20 strata units within the complex. Due to the higher nightly tariff paid by guests, this provides a small but viable management & letting rights business say for a two person team (husband & wife). At the other end of the scale are large corporate let hotel styled management rights businesses located in central business district locations that are of a substantial size with a structured staffing system.

Types of Management Rights: Traditionally management & letting rights were created in Queensland within the Gold Coast holiday/coastal region and were done so to capture the holiday lettings within the near beach positioned medium-high rise buildings. The design template was for a husband & wife to reside on site, to have an office-reception and to conduct holiday lettings similar to a motel. In addition and dependant as to the size of the complex, they would have had cleaning staff who in turn conducted the guest exit cleans.

Since those early days we now have the following types of management & letting rights business in five out of the seven States in Australia:-

→Permanent Accommodation →Holiday Accommodation →Corporate Accommodation →Student Accommodation →Aged Care Accommodation

There may be from time to time, hybrids and mixed business models, but the above five business models summarise this niche industry.

Business Structures: As mentioned above these businesses have various lines of income and that varies as to business model. In a traditional two person operated permanent letting business there is the Caretaking Salary paid by the Body Corporate to the Manager so as he/she cleans common areas, tends to gardens or lawns, arranges the repairs & maintenance of common areas by engaging on behalf of the Body Corporate, plumbing/electrical or other contractors.

The other principal line of income within this business model is the commission on letting income that arises from the property management service to investors who own units within the complex. There can also be additional income sources for the manager of this style of business where he arranges quotations on say the replacement of carpets within an Investors unit. The Manager in that instance can, via his Letting Appointment, charge a fee which is often a percentage of the total cost or it could simple be a flat and agreed fee.

Within the bigger operations, such as the corporate letting models, are many and various lines of income, such as profit on linen and exit cleans, consumables (soaps, shampoos etc). The aim of the Manager is to make a reasonable profit on these and other items without getting over zealous on his/her charges to the Investors, who are like all property investors, trying to make their way in the world by purchasing an investment property with a view of one day selling it for profit and/or retaining it as part of his/her annual income.

To Be Continued.