In today’s market place, buyers have to be aware of what they are up against. Buying right involves being fully informed on the business you are intending to invest in and the associated risks involved within that industry.
Choose a business you’re comfortable with that feels right, where you can imagine yourself running the business day-to-day – it’s a business that you can live and work from. Look inside the industry: are there special skills needed, government regulations, licenses required? Are you up to these challenges and commitments?
Management Rights is no different to any other small business, which is why you need to look at the big picture: ensure you have units that will rent and satisfy the needs of your customers. Choose a complex that is easily maintained and has labour saving devices, close to amenities and transport, a fully computerised office, long agreement, a comfortable manager’s unit – in essence, all the ‘plusses’.
Buying wrong means having difficulty satisfying your tenants and owners, and ending up with low occupancy, the wrong type of tenant and possibly a manager’s unit that does not suit your needs in size and a comfortable place to live. This end result could mean a difficult complex to sell!
There is risk associated with investing in any business, however, there are four steps to effective buying: knowing your values, planning, selecting, and committing.
KNOWING YOUR VALUES:
Management rights are sold on a multiplier of the nett income, so a buyer should be very well-informed about what they are buying and the average price they should pay for the size of the business as one multiplier does not fit all.
Management rights businesses have been popular because of the high degree of certainty of verification of income, legislation protecting management rights operations, lifestyle or sea change aspect of the business… But, overpay, and you may have to overstay your planned time allowed to try and recover your capital when you come to sell.
The second step is planning, where you need to know the market for your complex. Target the right demographic of tenants or guests who will want your complex; consider age, marital status, what they require and what they are prepared to spend – this applies to both permanent and holiday letting complexes.
When selecting, use the experts – they need to be professional, credible and representing your best interests. Many astute buyers are using a management rights specialist buyer’s agent instead of dealing with a selling agent; a buyer’s agent who works exclusively for you, the buyer, not the seller. If a seller engages a professional agent to sell their property and act on their behalf, shouldn’t you as a buyer have a professional to act on yours?
You’ve done your homework, you’re prepared. You’ve been to the information seminars, sold your property or your business, and whether you’re a new manager or an existing manager: this is it! A new business and a new working life awaits. Remember that buying is all about selling, and eventually you will be selling comfortably due to all the decisions you have made.
The buyer’s agents role is to locate the best available business to suit your needs and wants, whether it be an on-market or off-market complex. The agent will search, negotiate and provide an objective, unbiased perspective that is based on comparable listings and market place trends to find your ideal management rights business – for the best possible price on the best possible terms.