What to do first

Entering into Management Rights should not be a quick decision. It is important to research and discuss your circumstances with people who know and understand the industry.

In addition to the information provided here in the Australian Management Rights web site, you can visit other sites, attend seminars and speak with managers who are currently operating or have previously owned Management Rights.

To find links to other web sites, please go to "Where else can we source information?"

If you want to attend one of our seminars, just go to "When is the next Information Seminar?" AMR seminars are Information Only - that means, they are NOT Sales seminars.

When you have decided that Management Rights is right for you, enlist the assistance of a specialist Agent to assist you in finding a complex that will suit your individual requirements. Management Rights is combination of commercial and residential real estate and therefore your interests are best served by seeking out an agency that understands the industry.

Of course, we recommend that you start looking at listings offered by Property Pacific Real Estate. Bob Love and his team are not engaged in any other form of Real Estate sales - just Management Rights. Property Pacific's web site at www.propertypacific.com.au not only lists the complexes for sale but also provides additional information and, in many cases, extensive photographs of the various components of the complex.

You should also ask the Agent to provide you with as much information as the Vendor has made available eg Profit and Loss - and ask questions of the Agent. If he/she does not have the answers, they will ask.

Inspect

Having researched the possibilities, you will then want to inspect some complexes. Just let your selected Agent know the properties that are of interest and he/she will contact the Vendor to arrange a suitable time to inspect.

The Manager and/or the Agent will show you around the complex, including the common property and the Manager's residence. It is not always possible to inspect the rental units, if they are tenanted.

After looking at several complexes, you will then short list and want a second inspection. Again, contact your selected Agent to arrange the inspection. If you have specific questions that you want answered, let the Agent know so that the Vendor is prepared.

Accountant

An early appointment in your purchase process should be with your Accountant. An Accountant who has experience in the Management Rights field will be an invaluable asset prior to purchase and for the ongoing health of the business. It is very important to appoint a recognised accountant whose reports will be accepted by your financier. Your accountant will normally attend to the following:

Formal verification of the net profit
Review Trust Account records
Prepare a report which will verify the net profit as stated by the seller
Advise of any income streams or expense which are not normal in the management rights business

You will be required by law to have your trust accounts audited and your accountant should be able to assist in this process.

BAMR (formerly Window de Stoop) is well recognised and respected in the industry.

As practicing accountants and CPA's with over twenty years experience, many of which are heavily involved with this industry, BAMR offers the following documents that will assist you before, during and after entering Management Rights. They are:

Accounting Matters - including "Before Signing", "Verification and Profitability", "Bookkeeping - General Accounting and Trust Accounting", "Taxation Matters", "GST Implications"
A Step-by-Step guide to assist you through the "Purchase, operation and eventual sale of the business".

Solicitor

Your solicitor is an integral part of the Management Rights transaction. Your lawyer will be able to correctly structure the business initially to ensure success in your venture. Your lawyer will liaise with everyone including the Agent, the Accountant, the Sellers lawyer and most importantly You! Your Solicitor will step you through the whole process ensuring that your interests are protected at all times.

Rob Balanda and Clayton Glenister of MBA Lawyers are specialists with many years experience. MBA's advice and due diligence is a comprehensive process and includes the following:

Structure: Looking at how the business is to be structured initially is paramount to avoid paying unnecessary tax and enhancing growth of the business.

Contract: Liaising between the financier, accountant and agent to ensure the contract includes specific clauses to protect your interests.

Due Diligence: This is the most important task that your solicitor will undertake. By conducting a comprehensive legal due diligence review on the business, they will make sure there are no legal issues with the Caretaking and Letting Agreements. A full search of the body corporate records will be conducted on your behalf to ensure that there are no major body corporate issues pending or any issues with the contract or the current manager. The conveyancing of the manager's unit will be included as part of this process.

The Body Corporate: The settlement of the Management Rights is always subject to the Body Corporate's approval. This is usually a committee meeting held in the offices of the Body Corporate Manager. Your Solicitor should step you through the meeting process and potential questions which may be asked. They should also liaise with the body corporate's solicitor in relation to any changes to the Deed of Assignment.

Settlement: Your solicitor should make the settlement as smooth as possible whilst you are learning the business on-site. Usually there is a two week training window (one week prior and one week after settlement). Your Solicitor will attend to settlement figures, signing of documents and will attend the settlement meeting on your behalf. Your Solicitor is the one to ensure everything happens as planned and should keep you kept up to date at all times.

Your Lawyer should be able to communicate with you in a personal easy to understand manner and most importantly, deliver results. If your current Lawyer does not specialise in Management Rights, then they should not be used for this process. Management Rights is highly specialised. The wrong advice can have disastrous financial consequences.

For more information about MBA-Lawyers, please visit their web site at www.mba-lawyers.com.au.

Financier

Once again, some banks have specialist Management Rights lenders and we recommend that you deal with these types of knowledgeable lenders. Please refer to our Financiers page for some contact details and links.

Important points to consier:

Consider the value of your home, superannuation, additional investments, savings, shares, other assets
Decide whether any of the above needs to be sold in order to raise the necessary capital for the purchase

Serviceability v Security - Lenders will look very closely at your ability to service the loan regardless of your assets. This financial decision will be made very early in your investigations with the bank in order for you to determine your borrowing power.

Training and Licence Application

Find a Training Provider that offers the "Resident Letting Agent's Licence" training course in the format that best suits your circumstances. You can attend classroom training or complete the course by correspondence. Please refer to the "What training and licences are required?" for more detailed information and links to some Training Providers.

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