The concept of management rights usually refers to real estate properties. However, not many people are aware of what it is about, other than it allows you to make money off another person’s property.
In truth, there are businesses that provide management rights. These businesses assign a staff to a property to act as the property’s caretaker, called the on-site manager.
Core Elements of Management Rights
For someone to take advantage of management rights, three elements must be in place:
- There should be a real estate property that needs management. This could come in the form of hotels, motels, or other related properties.
- A contract that binds the owner of the real estate and the business offering management rights services.
- The authorisation given to the company to let out the place as they see fit, on behalf of the owners of the property.
Understand that there is not much governing body about how much a management right is worth. The figures are something that the parties – the seller and the buyer – agreed upon, but in general, the amount is quite significant.
With this the case, take the time to read the agreement before you sign anything, and look for the fine print. Gold Coast management rights brokers like resortbrokers.com.au recommend the following:
- Since the amount that you get typically depends on the length of the contract, try to have it at the longest possible term.
- For contracts about to end, request for an extension if you need to. Upon doing this, you can begin considering a number of things, including whether the new contract is similar to the current one.
- On the other hand, if you still have a long way to go with the contract, consider asking for a variation of the term. This allows you to further the option term. The most common form of this is a ‘top up’.
Management rights give on-site managers the capacity to earn from the property without investing into the creation of a new business.