While there are predominately two main types of Management Rights, which are Holiday (Short Term) or Permanent (Long Term) letting, it is possible to combine the two into a "Mixed Letting" business. In some cases, Management Rights may also involve "Caretaking only" or could relate to the management of purpose built accommodation for student accommodation. Many factors may influence the business operation and lifestyle relating to these businesses.
If you purchase a Management Rights business which is predominantly holiday letting then you are, in a sense, running a resort. You will need to market your building to attract holiday makers, usually for short stays (one weekend to a couple of weeks). You will be providing a higher level of service, but the returns are greater.
In a holiday letting complex, most of the owners are likely to be investors, so they'll be looking for a good return from their unit.
Advantages of Holiday Letting
The Return on Investment is likely to be higher than other forms of Management Rights. Managers make money on rent collection but also receive service charges for cleaning, linen and furniture hire and running a travel desk.
The holiday letting business involves understanding how to market tourism properly. Some do this better than others. If you understand the secrets of successful marketing of your property, you have an ideal opportunity to grow the capital value of your business.
The location of your holiday letting business will probably be superb which is great for lifestyle, but remember good returns don't come from sitting around the pool!
Although the Management Rights industry had its beginnings in tourism areas, it didn't take long for the concept to spread to residential developments including high rise unit developments, townhouses or condominium type developments.
The principles for managing a residential complex are the same as for holiday letting:
- Find the tenant
- Collect the rent
- Look after the property
- Nurture your relationship with your unit owners
- Grow your business
The main difference is that you will have more owner-occupiers living on site and your tenancies will be for longer terms (six months or more). You will need to pay particular attention to the grounds keeping. Remember, many of the people who pay you, (the owners, collectively called the Body Corporate) will be inspecting your work every day.
Advantages of Permanent Letting
- The income stream will be steadier; the business will not be subject to the peaks and troughs of holiday letting.
- The 'front desk" requirements are not as great as with holiday letting.
- You are not as involved in the "hard sell" of tourism and its related products.
