Management Rights (sometimes referred to as Management and Letting Rights, or M.L.R.) are a form of business enterprise associated with the accommodation industry. Management Rights businesses have been around since the mid 1970's and are found mainly in Queensland.
The developers of most larger residential and holiday resort complexes, apartment complexes, townhouse / villa developments, realized early on that there was an advantage in having an on-site manager who would (a) live on site and look after the day to day running of the complex as well as do the basic common property maintenance and (b) provide a Letting Management service to absentee investor owners. To achieve this aim the Body Corporate (owners’ corporation) of a multi-unit complex enters into two contracts with an individual or company to (a) maintain the common property and (b) run a letting business from the complex. When this happens, usually when the Body Corporate is still controlled by the developer, a Management Rights business is created. Once created the first and subsequent management rights owners, can then resell the business like any other.
Income is by way of a salary from the body corporate for part (a) and letting commission and ancillary income from individual unit owners for part (b). The purchaser acquires the managers unit at market rates and the business on a multiple of between around 3 to 5 times the net income, to show between a 20% to 33% return on the business investment. Smaller complexes with smaller units sell on a lower multiple and often involve little work for strong returns and may well suit the likes of a day trader allowing them to work from home while still generating a salary and commission income.
More Info: http://www.raasrights.com.au