Off Plan Purchases

Published: 16 March 2007.

With the growth of population and inbound tourism in Queensland continuing there is a strong development market for holiday and permanent unit complexes.

This, of course, gives rise to a constant flow of management rights businesses being sold off the plan.

I you are considering a purchase of this type of business there are a number of things to be aware of when you are making an assessment of the value of the business. At Archer Gowland we use a comprehensive process in evaluating these proposals. Listed below is a non exhaustive list of issues for consideration of prospective purchasers;

1. Obtain a detailed a detailed description of the project including location, number and type of units, size of units, expected gross rentals, body corporate salary per unit and if holiday units a detailed breakdown of other income streams.

2. Check if there is any possible growth in the size of the letting pool.

3. Look at the purchase of the units through an investors eyes.

4. Are units likely to be attractive to owner occupiers?

5. What is the competition like from local Real Estate Agents?

6. Will you have access to purchasers to discuss rental intentions or fit out?

7. Is the developer offering any warranty regarding the number of units in the letting pool?

8. Is the location attractive to tenants/investors?

9. What is the prospect of future development which may be either competitive or complementary?

10. Ensure the building and grounds layout is low maintenance.

11. Make sure you are comfortable with the developers and try to inspect other complexes they have completed.

12. Does the layout allow for minimal staff?

13. What are your duties under the Caretaking Agreement and does the proposed Body Corporate Salary recompense you adequately.

14. Will common areas be fitted out adequately and will tools and equipment be supplied for you to complete your duties?

15. Make sure you have a saleable asset by checking length of agreements, exclusive use areas, layout for ease of management, reasonable office hours.

16. Are Body Corporate budgets adequate?

17. Determine what level of initial marketing will be required and what will be the developers contribution.

18. What will happen to unsold units?

19. Have valuations been undertake for each unit type?

As well as these there are a number of other issues that arise depending on the particular development. As with most start up businesses you should use expert consultants to assist you to overcome the lack of historical data.

There are also a number of funding issues that arise that I have not addressed above as they are particular to individual borrowers and developments.

Management Rights are solid businesses so the catch cry is not ?be wary? but ?be aware.?

Dennis Ivers
B.Com CA FTIA
Director

Reply from: matthew

10:46am Sunday, 08 July 2007

could someone please lead us on the right path in regards to finding an expert consultant to assist with marketing a new property thanks matt bysher 0438828886

Reply from: Nick Buick

4:29pm Monday, 09 July 2007

Hey Matthew,

Welcome to the site. Your best bet would be to actually contact some of the MR Brokers on this site who specialise in this sort of thing.

To see which brokers are the most active in your state, just click the map... eg: click on QLD and all the management rights for sale in QLD will display.