Marketing Management Rights . . . a contrary opinion
I have an absolutely opposite point of view to most of the Industry on the way Management Rights should be marketed. (As you will notice from my website).
Most Brokers in their advertisements or website entries list price & net income and sometimes unit value. As if the only things of importance in purchasing Management Rights are “the numbers”.
I am far from convinced that this approach does any favours for sellers or even potential purchasers. For a start, I believe it is a grave mistake to think that a Management Rights business is "a largely unemotional business related investment". Only passive investments can be "unemotional" and Management Rights is very much an active investment. The on-site Managers will "live the investment" 24/7. The high turnover of Management Rights Businesses (many selling each 2 to 3 years) supports anecdotal evidence that buyers who have based their decision to purchase mainly on "the multiplyer" can very soon become unhappy in the business. Many "want out" within months of taking over as they start to realise that there is more to this type of Business than just buying something that has a high return on investment.
I could perhaps agree with figures only listings, if it were for businesses where an investor could afford to put a Manager in to run the Complex as then it would be a passive investment. But for most, this is only an option in businesses selling from approx M$2.5 upwards. But the majority of businesses offered for sale are in the low to mid area of the marketplace where buyers will in fact be on-site 24/7 and very much actively working in their investment. It is pure folly not to give major importance to your emotional needs if your investment, your business AND YOUR LIFESTYLE cannot be seperated. I believe that oversimplifying listings to risk them being graded based purely on the multiplyer or ROI is a real disservice to both buyers and sellers.
Being an independent operator and still relatively new to the Management Rights Industry, I do not have the volume of listings (I 'd like more listings if any sellers out there agree with my philosophies) that affords me the luxury of handing potential buyers a list of a dozen in their price bracket, with just Price, value of Unit, salary & total net income listed and say to them "pick one of these". . . . . having just a limited number of listings to work with I actually have the need to analyse each listing & highlight their unique points of difference so that buyers can give full and proper consideration to what will be (with business, investment funds & home combined) the singlemost important investment decision of their lives. . . . and I can guarantee, that if lifestyle and your relationship with your partner are of any importance to you, that every aspect of the purchase must be factored in to ensure that the right decision is made.
Is the residence adequate? (not every couple can live and work within the confines of a 2 bedroom Unit 24/7 without someone going "nutso")
Is permanent or Holiday letting best for your personalities and lifestyle preferences?
Do you have the sales & marketing skills to lift an underperforming business? Or are you better to pay a higher multiplyer for one that you just need to retain the status quo?
Can you comfortably handle the day to day maintenance and caretaking duties? No point in caretaking acres if you hate mowing lawns and pruning shrubs - even if the ROI is attractive.
If the building or complex is looking tired, are you comfortable you can articulate the need to refurbish to a committee that may not share your (more than likely correct) views? Or do you take a lesser ROI that may come with a more immaculate complex?
I am against oversimplifications, I feel that the buyers need to base their decisions on "the total package" and I feel that sellers who have built their businesses and relationships within it so that it all "runs like clockwork" are perhaps entitled to aknowledgement of these very pertinent facts and not just have their listings graded by numbers. This is why I present my website the way that I do. I think it makes more sense, I certainly hope so.
I have another specific point of difference in the way most brokers market Management Rights. I don’t like the idea of disclosing net income on a website, for me it's the matter of privacy.
Many Complexes are identifiable by the photographs and descriptions . . . . perhaps not so much to buyers but definitely to neighbouring owners of other Complexes and on-site owners in the advertised Complex. If you are not a bonafide buyer of management rights I just feel that you are not entitled to know what your neighbours income is.
For the properties I market, once a buyer identifies who they are and that they are in fact potential buyers for the complex they enquire about, I ask them to sign a simple confidentiality form and I am then very happy to give them the full income figures and a further written report covering special features and potential to improve etc. . . . . the more informed a GENUINE buyer is the better.
I don't mind disclosing the Unit Value – I sometimes do this on the 3rd party sites I advertise on like www.thepropertymanager.com.au and www.realcommercial.com.au as this information is already in the public domain and easily available to virtually anyone . . . it's just that I prefer to keep my Clients income information away from anyone who is just a "sticky beak". I take the same approach on the Hospitality Properties and even the Investment Units in a managed Complex that I sell too, and I have never had a complaint about not disclosing income on my website from anyone who is a GENUINE buyer. Anyone else, I try not to worry about.
Terry McMiles (www.terrymcmiles.com )
