A Management Letting Rights business (MLR) is an enterprise that involves the caretaking and letting of townhouse and unit complexes (strata titled properties). There are over 4,000 MLRs operating in Queensland with the majority focussed on holiday letting outside Brisbane.
Making money
Management rights businesses sell at a multiple of the nett profit (ie. after all business expenses) with the multiple currently between 3 to 6 times nett income. The multiple varies for a number of reasons:
- Position
- Trading history
- Length of agreements
- Future growth
- Supply and demand
In order to maximise the returns that your MLR can make, there are a number of key success factors that each business can introduce. These key success factors have been identified along with actions you can take to improve your business.
Key success factors
While MLRs are regarded as a relatively safe investment proposition, there are a number of key success factors that will protect your investment:
- MLRs are a ‘people focussed’ business. You must look after your pool of owners and meet the needs of your tenants
- You must be clear with your body corporate regarding the duties they expect you to conduct and the ones they expect you to supervise
- You need to maintain the number of units in your pool (a full licence allows you to sell as well as let to maintain optimum letting pool)
The following checklist will help you to make enhancements to your business:
|
Key success factors |
Tips for success |
Status |
|
Look after your pool of owners |
Contact Unit preventative care Professionalism / dedication |
|
|
Meet the needs of your tenants |
Availability Environment Common area up keep |
|
|
Be clear with your body corporate regarding your duties |
Understand requirements Regular communication Proactive on enhancements |
|
|
Maintain the number of units in your pool |
Full or sales licence Realistic expectations All of the above |
Big improvement opportunity
MLRs involve a fixed level of costs, irrespective of the size of the letting pool. We have found that increasing
the letting pool or ancillary income to the manager that is regular and recurring has resulted in an improved valuation – whether for sale purposes or refinance.
Want more information on how you can increase the profitability of your management rights business?
Instantly download the FREE Archer Gowland Ebook (below) "Increasing the Profitability of Your Management Rights Business". In this guide you will find a list of key success factors, ways to make more money and how to prepare your MLR for sale.
You are also invited to contact Scott Wicks from Archer Gowland on 07 3002 2699 for a free information session regarding your MLR business.
Our promise to you - your contact details will remain confidential at all times. You will receive only one email per month with valuable information to improve your financial situation, however you can unsubscribe from this correspondence at any time.
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