Finding buyers for the bottom end of the market

Published: 23 June 2008.

Contributed by Terry McMiles of Terry McMiles

It is a fact that the top end of the Management Rights market is a completely different product to the bottom end.

At the top end, the business value tends to be at least 70-75% of overall purchase price
- Demand is greater than supply
- Finance is easily obtained as leverage principles work
- Many buyers have had experience and are moving “upmarket”
- Partnerships with silent investors are viable

At the bottom end, the residence value is often 70-75% of the overall purchase price
- Supply is greater than demand
- Finance is more difficult as income can be modest
- Most buyers have no previous industry experience
- Partnerships with silent partners are not viable.

These very real differences need to be taken into account if sellers of lower priced Management Rights (both Vendors and Brokers) are serious about reaching the widest possible market for their product.

Where can “the widest possible market” be found? I believe it is not where we are advertising at the moment.

We need to first look at what we are selling. We are selling Lifestyle, we are selling a home that has attached to it a 2nd income, or in some cases a 3rd income, we are selling a home that includes some part time work, we are selling a home that will enable a retiree to keep active, a home that will enable a young mum to be at home with the kids or when they return from school. We are selling a home with an income attached that will cover the mortgage. We are selling a home that will allow many people A Better Lifestyle.

To reach the potential buyers for our lower priced Management Rights, at the moment our advertising choices are Print Media (Newspapers) or the internet . The problem with the internet is that to find Management Rights one firstly has to know that the term “Management Rights” exists and what it relates to. Most of our potential buyers (Home buyers looking for a better lifestyle choice) have probably never heard of “Management Rights”.
If we advertise in a Newspaper, the management rights column is in the Business Opportunities or Businesses for sale section. This is fine for the top end of the market but next to useless if we are selling an overall “package” where the home accounts for 75% of value in this Better Home & Lifestyle purchase. The homebuyer we are seeking will probably not even look at advertisements in the Business section of the paper.

What we need is a more appropriate position for our advertising.
In the Newspapers, we need to be able to advertise in the Real Estate section (or Liftout), not the business section. We need a new column, that better identifies what we are selling. It could perhaps be called “Homes with Business” , or “Lifestyle Real Estate – Homes plus Business”.
On the internet, we need Realestate.com, Domain etc to have an extra Category “Homes with Business” in the Select property type choice. But it needs to be in the houses / homes for sale section and not in the business classifications.
This would enable us to reach a far greater number of potential buyers and “spread the word” about the Lifestyle benefits of lower priced Management Rights.
I have written to The Gold Coast Bulletin and explained why a new Real Estate classification would help us reach the right type of buyer for lower priced Management Rights. (The home being the main value component in the purchase, the business secondary.)
I have also said that the column would also suit Hospitality businesses that include a home. Examples are B & B’s, cabin accommodation properties, small Motels, Caravan Parks etc that are also Home and Lifestyle purchases.
A third suitability for advertising in this new column would be sellers of Homes with office or Council approved Home business space.

If you agree with my thoughts on being better able to reach buyers for the cheaper end of the Management Rights market, please join with me to introduce more buyers to our Industry.

If we are able to reach out to potential buyers who are unaware of the existence of Management Rights it may be that we give ourselves some extra work in educating people about Management Rights. Most Brokers have “about Management Rights” sections on their websites already, so I don’t see this as a price too big to pay for a bigger market to sell to.

Reply from: R.R.S. HAMILTON

5:39pm Monday, 23 June 2008

Hmm interesting,

I also find that the agents arew not too interested in selling the "smaller" complexes.

In fact, one agent even had toi hide to tell me that he could sell a $1M complex with no more work than he could sell a small one. Which really affirmed my opinion of many sales people.

If I wished to give my Management Rights away, I could do it without the intervention of a sales person. Agreed, we need a better wayt to sell the sub $500K complexes.

Regards......Ralph.

Reply from: Nick

8:51pm Monday, 23 June 2008

Wow Terry... your article scored a 5star rating from a bunch of readers. We will have to look into this further to see if there's a way we can make MR more accessible to the 'general public' on our website(s).

Ralph, thats quite funny. I've made the exact same argument, almost verbatim, to our Business Development Managers in the past... "I don't need to hire a salesman to give away my blah-blah-blah". I guess you'll find low-ballers in every sales industry. Its one of the differences between a good sales professional and a bad one I suppose.