The Rising Number Of Contracts Not Proceeding

The past year or so has seen an increasing number of contracts not proceeding to settlement. This is a worrying trend with not a common reason for it happening. We have seen finance issues, Bodies Corporate not assigning, valuations of residences, buyers getting cold feet, verification of figures coming up short and issues with some older agreements all contributing one way or another to the problem. There is a role to play for everyone involved to do their part in making these things happen from the accountant putting figures together for sale, the buyers being truthful about their financial circumstances, the vendors leaving cleaning figures in the P&L as an expense and allowing for a receptionist if it has a larger net profit (i.e. $280,000 plus) and the brokers qualifying buyers harder than they currently do and not pushing people into buildings they can’t afford or stretch themselves too far. 

 

 

The days of husband & wife teams being expected to do 100 hours a week covering everything from maintenance of lawns and gardens, repairs to units, market the business, do all the office work and man reception in holiday buildings and then arrange and oversee trades people are gone. No one spends $1,000,000 plus dollars to do all that and then clean units as well so vendors who take out cleaning wages and receptionists are kidding themselves if they then blame the broker for not selling their business.

Similarly accountants who don’t advise their clients to leave those figures in as expenses are to blame as well and the brokers who don’t point it out to potential buyers run the risk of a contract falling over as the verifying accountant will pick it up and include it in his report.

Vendors should be wary of including items in their P&L that are one off items such as replacement of air conditioners and hot water services, painting of units and anything that is non recurring as somewhere around the $350 to $400 maintenance profit per unit per year in the letting pool is acceptable with accountants we believe but brokers should be asking their buyers “are you a handyman” if there is a high net profit on repairs and maintenance before they inspect as they waste everyone’s time if the buyer won’t pay for the R&M component. Valuations can be an issue so prepare your unit for sale, look at and say to yourself “would I buy this residence?” when a coat of paint and carpets cleaned could present it in a new light.

The banks are becoming increasingly difficult to deal with particularly on smaller property management rights and are looking for higher deposits, preferably cash, and longer agreements for interest only loans. The myth that the committee cannot refuse a new manager has also been put to the test recently and if they don’t think you can do the job they can refuse the assignment. They cannot discriminate but buyers should be aware that it is not a foregone conclusion and they should prepare proper resumes with personal and business references and a business plan to help secure the assignment. Nobody wants to spend thousands of dollars on verification, due diligence and finance approval to see the purchase fall over at the last hurdle, so brokers should make sure their buyers are informed and well prepared.

In this increasingly difficult environment management rights still stands out as a great, secure and profitable business but we all need to play our role in making it easier to buy, not harder, by being honest with vendors when listing so they know their role, qualifying buyers better so we don’t waste time on inspections that they can’t afford or don’t suit and making sure they use industry experts to ensure everything is covered.

Australian Landlord Insurance – Excellent Coverage, Value and Referrer Program!

TheOnsiteManager.com.au frequently gets introduced to many products, including landlord insurance, catering to the real estate industry. With our managers in mind, we assess the overall benefit of each product. Recently, Australian Landlord Insurance (ALI) presented an offer to us to take to our managers. We are pleased, on behalf of ALI, to offer to you landlord insurance for just $320. This represents a reduction, in most cases, over landlord’s current policies but also provides your clients with additional cover in many areas. Also note that the normal cost of a ALI landlord insurance policy in Queensland is $325. 

 

 

ALI’s product is extremely competitive in the current market. Some of the main features of its policy are:
Rental default up to $18,000 with no excess, up to a maximum rent of $1,500 per week and the number of weeks is not limited on all rental default claims. As an example, if a property rents for $500 per week, rent default coverage is up to 36 weeks. Whereas some other insurers only offer up to fifteen (15) weeks rent default coverage.
Murder/Suicide/Government – 104 weeks cover. Whereas some other insurers provide 52 weeks cover
Accidental, deliberate & malicious damage (inclusive of pet damage) up to $70,000. Whereas some other insurers provide coverage up to $60,000 but presently only provides $500 cover for deliberate and pet damage.

Not only does ALI provide a significantly better offering and a far lower premium, they also have the most generous referral fee we’ve found at up to $30 per policy per year!

If you wish to take advantage of their offer, we will, as a priority, arrange insurance coverage with ALI and ensure you get your discount as part of TheOnsiteManager.

TheOnsiteManager.com.au has also bundled up with another services provider, Hotspots Australia to offer smoke alarm compliance as well as a increased referral fee of $30 a property when combining both landlord insurance and smoke alarm compliance. Additionally, there are discounts for owners with multiple properties.

When a Management Rights Portal, becomes an Investment Property Portal

Naturally, onsite managers always prefer to sell to an investor, it just makes sense from a business perspective… But more than that, managers know their stock inside-and-out, they literally *live* and breath their listings, unlike a conventional agent. The manager understands how units behave as investment vehicles, and they can do an excellent job explaining all this to a prospective buyer without even thinking about it. It just rolls off the top of their head. They know the condition of the sinking fund, the admin fund, how the committee is performing, the schedule for upgrades, the return potential and current rental demand, and of course how much the units are selling for.

I know from my own experience buying investment properties, the onsite manager is always the best person to speak to about expected returns in a complex. Even when an outside agent is listing the property for sale, I find when I tell them I’m purchasing for investment, the first thing they do (assuming they don’t try to poach the management for themselves) is flick me over to the onsite manager to find out about the investment details. The manager has to field all the questions, and basically sell the unit to me, while the agent gets all the commission and credit. It’s not fair – and it’s one of the reasons we invented TheOnsiteManager 15 years ago – allowing onsite managers to also sell listings inside their complex and compete with the outside agents… and of course we do all this for managers, without charging them a dime of commission.

It’s always amazed me how well managers do at selling listings too, and how much they seem to doubt themselves when they first come on board. They are often intimidated by outside agents and don’t think they can do as good of a job. They’ll often call me, elated, when they close their first deal and “it was so much easier than I thought!”. Of course selling listings isn’t difficult when they’re marketed correctly, priced correctly, all the contracts and paperwork are in order, and the sales person knows the product inside and out. We can help with the first 3 factors, the last one managers take care of themselves.

More and more we’re finding investors, and even diversified funds are using TheOnsiteManager to identify viable investment properties to purchase for their portfolios. They’re actually using the site directly, instead of going to sites like RealEstate.com.au or Domain.com.au because the site has so many investment listings and all listing content is investment-centric. Of course it was never the original intention of our website to be an investment property portal – our site was designed to be a management rights portal – but we certainly do have a lot of investment property listed there. We have listings from over 400 different complexes! And with that, come users hunting specifically for investments. I’m even getting fund managers contact my office wanting spreadsheets of all current listings to identify the best properties to purchase for their clients. It’s really exciting to see.

In order to encourage this new audience, we’ve started presenting more financial data on residential sales listings to help investors make a better short list of property. Now in search results, listings will show (in addition to the usual beds, baths, car spaces) The Floor Space; The Gross Return (PA); and; The Yield. TheOnsiteManager.com.au is the only property portal that displays this data to investors from search results, making it a far quicker process to nail down suitable investments. We’d strongly advise all managers selling listings complete these financial fields to ensure their listings aren’t overlooked.

We’ve also focused heavily, and invested strongly on Search Engine Optimisation for our top 10 suburbs in terms of investment property listing density. These are Southport; Oxley; Carrara; Bowen Hills; Calamvale; Labrador; Runaway Bay; Clear Island Waters and Waitara. As a result, if you search google for Investment Property In [Suburb] or Investment Property For Sale [Suburb] TheOnsiteManager is generally the first organic listing on the page after RealEstate.com.au. TheOnsiteManager.com.au is beating every other realestate portal, including Domain for investment related real estate searches in the top ten regions our managers list in. This is obviously a considerable advantage for onsite managers seeking to market to investors.

You can see the new investment section on the website by going here: https://www.theonsitemanager.com.au/investment-property . We’d love to speak to you about how we can assist you to sell and rent residential listings inside your complex and strengthen your letting pool **WITHOUT** sacrificing your commission, drop us a line here.

Management Rights, The Developer`s Role

Lawyers acting for buyers of Management Rights are often faced with the task of trying to explain to their clients problems which they may face as a result of badly worded Caretaking and Letting Agreements. Much of this could be avoided if developers and their advisers took more care in preparing these agreements.

 

Developers have a golden opportunity to set up Management Rights in a way that will not create difficulties for building managers. The developer is in complete control of the Body Corporate at the time the original Caretaking and Letting Agreements are put in place.

I have acted for many people buying units from developers and I have never found the content of these agreements to be an important factor in deciding whether or not to buy in a particular development.

Of course the agreements must be fair and reasonable to the Body Corporate; in fact the Body Corporate and Community Management Act requires this. However too often a potential buyer of the Management Rights will find that the content of the agreements makes a decision whether or not to buy a difficult one. In many cases the content creates potential problems for the buyer because of ignorance of the law relating to Management Rights on the part of the developers and their solicitors or a lack of consideration for the potential building managers commercial interests.

In some cases the content of the Caretaking and Letting Agreements indicates a failure on the part of those preparing them to appreciate that a Body Corporate’s powers are limited by the Body Corporate and Community Management Legislation. Some agreements:- 

contain duties which require the building manager to carry out work which the Body Corporate has no power to pay for include the delegation of Body Corporate powers to the building manager which the Body Corporate has no power to delegate.

In such cases prospective buyers of Management Rights are faced with the possibility that some time in the future their agreements could be unenforceable against the Body Corporate.

The following are some examples drawn from actual agreements which illustrate a failure on the part of those preparing the Caretaking and Letting Agreements to properly consider the commercial interests of the building manager:- duties that are so broadly worded they are bound to cause confusion between the Body Corporate and the building manager as to the extent of the work the building manager has to carry out to perform the duties a Body Corporate being given the power to set the hours during which the building managers office must be manned a Body Corporate being given the power to force a building manager to transfer the managers unit and the Management Rights Business to someone else when the Caretaking and Letting Agreements come to an end.

 

This seriously compromises the building managers negotiating position when seeking extensions of agreements complicated duties in the Letting Agreement when all that is required is an authorisation to allow the manager to operate an onsite letting agency failure to give the building manager control over areas required for the proper conduct of the Management Rights For Sale Business by freehold title. allowing the Body Corporate to terminate the Agreements if the building manager goes bankrupt, or if a company, is liquidated or put into administration. Because of the Gallery Vie decision, such provisions may make it difficult or even impossible to obtain financing for management rights procurement or purchase.

Also, such a provision is not contained in the legislative provisions allowing for termination.

Developers and their legal and body corporate advisers must make sure the content of Caretaking and Letting Agreements is right before the selling of lots in the development starts. Developers are obliged to provide to buyers of lots copies of the proposed Caretaking and Letting Agreements. Any subsequent changes to the proposed agreements must be notified to contracted buyers each of whom may have the right to cancel a purchase if they will be materially affected by any of the changes.

Sale puts Quays in Management Rights Super League

 

BIGGERA WATERS apartment complexes Harbour Quays and East Quays have joined the super league of Management Rights Gold Coast with their caretaking and letting businesses and associated real estate selling in one line for close to $13 million. 

 

A syndicate of 10 local investors has bought the 363-unit Harbour Quays and 300-unit East Quays management rights portfolio in an off-market deal secured by Resort Brokers Australia for developer Emandar Group.

Agent Alex Cook confirmed earlier reports that the sale price for the 10-building operation was in the $12 – $13 million range, including seven apartments and eight offices.

“With 663 apartments in 10 buildings across the two adjacent projects, and 450 currently in the letting pool, this constitutes one of the biggest permanent residential management rights sales on the Gold Coast,” Mr Cook said.

The deal, which settled on Friday (August 11, 2017), is the second largest permanent management rights transaction on the Gold Coast in terms of unit numbers.

But, with its larger real estate component, the sale price easily eclipses the $10.5 million believed to have been paid by Mantra Group for the 788-unit Southport Central buildings.

Emandar established and retained the management rights as they developed Harbour Quays and East Quays progressively since 2012, selling out the first six-building project by mid-2014 and the final four-stage complex by late last year.

“Each of the six buildings in Harbour Quays is a separate scheme, so the sale included a manager’s unit and office on title in each,” Mr Cook said. “East Quays, although four buildings, is covered by a single scheme, with the buyers taking one unit and two offices.”

The consortium of private investors is led by James and Sandra Stapelberg, who will be the Harbour Quays and East Quays onsite managers, supported by Garry McKenzie in a purely administrative role.

The Stapelbergs are long-time Gold Coast resident managers, while Mr McKenzie has been involved in the management rights industry here since the mid-1980s.

“The business is established and operational, with both complexes fully tenanted, delivering a attractive net profit of circa $1.5 million, so it attracted very keen interest from a number of parties,” Mr Cook said.

“Emandar, who opted to retain the rights during the establishment stage after project completion, selected these operators based not solely on price, but particularly on their excellent track record for quality property management,” he said.

“Struck at a multiplier in the six-plus range, it demonstrates the ongoing strength of the Management Rights Gold Coast market, especially for large-scale, high-netting properties.”

Mr McKenzie said the extent of real estate included in the deal was seen by the syndicate as providing an opportunity to improve convenience and amenity for residents and tenants.

“It adds security and stability, allowing us to deploy management and operational staff where they are most effective across the sites,” he said.

“We also plan to use some of these spaces to introduce new onsite facilities, perhaps a café or coffee kiosk, real estate office, and a concierge-style cleaning and maintenance outlet where residents can easily book anything from housekeeping to car detailing.”

Mr Cook said the Harbour Quays and East Quays sale shared the spotlight with other super-league management rights deals in a market where the focus is more frequently on short-term resort-style properties.

Resort Brokers and Mr Cook have also been behind some of the biggest deals in the holiday category, including Soul Surfers Paradise, and Beach Haven and The Beach Apartments at Broadbeach.

These highly-competitive bids have been won, in the main, by high-profile listed resort companies, including Mantra Group and Thailand’s Minor International.

The Harbour Quays / East Quays sale comes on the back of other recent large-scale permanent management rights sales including the 263-unit Waterford Apartments complex developed by Matthews Property at Bundall, also handled by Mr Cook.

“While the sale price is confidential, Waterford was also bought by a group of private investors, demonstrating the purchasing power of syndicates and partnerships,” he said.

“Mum and dad investors are able to pool their resources to buy high quality, high-netting assets such as these.”

SPECIAL EVENT – INVEST & GROW A MANAGEMENT RIGHT BUSINESS

155 Queen St, Brisbane City QLD 4000, Brisbane Fishburners is in the Zara building, but entrance is through the building next door (“Regent”). There will be an event attendant helping you with directions in front of it.

About Our business events:

Our business events provide members an opportunity to build business networks and exchange ideas in a relaxed social setting.

We welcome both Chinese and Australian entrepreneurs to join us！Attendees at our events are warm, positive, career-driven and love to meet new people.

Event schedule:

6.30-7pm Business Networking

7-8pm Guest speaker presentations

8-9pm Business Networking Event speakers:

Jessica Dong, Founder of SIRE Management Rights

Jason Fu, Director at Golden Water Mortgage Services

Lindsey Sun, Managing Director at Meow Media

Red Dragon Body Corporate Services

Topics covered by speaks:

Introductory to management rights business

Digital marketing for management rights business

Increase management rights business income

Valuation of management rights business

How body corporate services operate, where caretakers fit into the role and how to make the most out of the caretaker role.

Benefits of our business events:

• Network with like-minded entrepreneurs and business professionals

• Learn more about the Chinese entrepreneurs community in Australia

Venue Sponsor:

Many thanks goes to Fishburners who have provided the space for our event! It’s Australia’s largest community for tech start-ups and a not-for-profit organisation.

Options, Be Very Aware

A valid and current Caretaking Agreement and Letting Agreement (“Agreement”) with a healthy term remaining is one of the most valuable assets in a management rights business. This is recognised by anyone with an interest in the business, including banks and potential purchasers.

It is therefore imperative that Service Contractors and Letting Agents (“Building Managers”) understand the process that is involved in both exercising an option and adding an option to the term of their current Agreement.

Exercising an Option to Renew

The effect of not exercising an option can be disastrous. If a Building Manager does not exercise an option within the required time frame, there is no obligation on the Body Corporate to either re-engage or re-authorise the Building Manager as a Service Contractor or Letting Agent. If an option is not correctly exercised, then the Building Manager has the potential to lose the heart of their business.

Building Managers should:-

Check the current term of their Agreement and when it ends;
Verify whether there are any current options to renew; Carefully read the option clause and any other clauses affecting the option to see how and by when an option must be exercised; and Diarise so that the option is exercised in accordance with the Agreement before the period to exercise the option has expired.

Adding an Option to Renew

Adding an option to an agreement sounds a simple task. However, failure to follow the correct procedure can end in disaster.

Although there are ways to refresh the term of the agreement up to ten or twenty-five years (depending on which module of regulations applies to the Scheme), the maximum length of an option is the lesser of either:

Five years; or Until ten or twenty five years (depending on the module) from the date of the General Meeting approving the motion to add an option.

All motions seeking to add an option must be presented with the correct forms, and can be passed by ordinary resolution in a General Meeting of the owners by secret ballot where no votes are exercised by proxy. There are important timing requirements as to when the motion must be lodged, and how often such a motion can be considered. Suffice to say that Building Managers who attempt the process, without the assistance of a lawyer skilled in management rights, usually get it wrong.

Even though a healthy term looks great on paper, paperwork itself does not earn the vote of the owners, and it is up to the Building Manager to develop a good working relationship with the Body Corporate so that there is incentive for the Body Corporate’s lot owners to approve the addition of an option in future years.

Building Managers should favour a rollover, or reverse option, provision in their Agreements. This provides for a continuous 5 year automatic rollover of the term , to allow for a total term of 10 years, in the case of a scheme governed by the Standard Module regulations, or 25 years, in the case of a scheme governed by the Accommodation Module regulations. In this case, the Body Corporate would have the option of terminating the rollover of the Building Manager has been in serious breach of the Agreement at any time. However, many lot owners are opposed to such rollover provisions. For psychological reasons, they like to have power over the extension process.

Building Managers have to realise that the politics of dealing with Body Corporate members is very much the art of the possible. Building Managers face the dilemma of, settling for options that are almost certain to be agreed to, or pushing the boundaries, which may lead to a rejection of what is being sought, and having to wait another year before, once again, being able to put an option motion on the agenda.

How to Find the Right Property Management Company?

Putting resources into real estate can be an extremely lucrative attempt, however, it is also one that requires a great deal of exertion. Particularly if you have purchased a property with the plan of leasing it, you should be ready to give various service to your inhabitant. From finding occupants, gathering rent, building upkeep and everything in the middle of, gathering income from an investment property is not a passive exercise. 

 

So as to make all the previously mentioned things happen, it is essential to contact the companies who deal with property management rights because they can help you to get a decent property at a not too bad cost. These organizations won't simply help you purchase a decent property, yet they can additionally manage it on your behalf. This will help in producing most extreme income from your property. Along these lines, it is vital for you to realize that, which is the most reputed property management company in your locality.

Tips for Finding the Right Management Company

· Search Your Local Network: Ask your friend, family members, realtors and contractors about the property management companies in your area. Gather as much information as you can for your further reference.

· Ask the Company Officials Important Questions: After gathering the information, contact the companies to get an additional information about their clients, properties they are already managing etc. Try to get the property portfolio and look for the results to get an idea about their property managing techniques and what kind of results they are going to provide you if you hire their service.

· Value for Money is Key: After gathering necessary information, discuss pricing and ensure that you are getting satisfying results.

· You Should Take the Calls: Remain in constant touch with your property management company you have selected because you and the company should work in a team and any lack of information can make a lot of difference.

The aforesaid points are just an overview to finding the right management company as per your requirements but, it is ideal to do some homework before choosing any property management organization. By picking the correct property management organization, you can evade superfluous headaches, time wastage, and spare a lot of cash too.

Management Right: A Good Investment To Boost Your Financial Ladder

Management Rights is basically characterised as a home with an income source and is the most straightforward approach to characterise it. It is also defined by various other confused definitions, however, they are hard to understand.

In simple words, we can say for effortlessness the home turns into a venture, not a dead resource. It is the combination of investment assets fund, a blended home and business condition thus making it less demanding for somebody to accomplish a specific level of the way of life. 

If you are looking forward to investing in the management rights in Melbourne, the opportunities are expanding their boundaries. You will find numerous residential as well as tourism management rights across the area to accomplish your dream with additional perks in your pocket.

Melbourne is one of the developing goals with a refined way of life and social attractions. This makes it the perfect area to buy management rights for extraordinary investment returns and a pleasing lifestyle. There are numerous brokers across the area who offers the best range of management rights for sale in prime locations that can be purchased depending on the requirement and of course, the budget you have to make the investment.

Individuals usually choose this business opportunity when they find themselves close to retirement from the current job and wanted to remain dynamic with an additional source of income. This sort of opportunity that helps in generating income while enjoying life after years of hard work is incredible for the individuals who wanted to remain at home in an area that is both delightful and relaxing.