DOC

WhatWho sets multipliers - RAAS RIGHTS

By Lucille Cruz,2014-03-21 15:21
10 views 0
WhatWho sets multipliers - RAAS RIGHTSsets,Sets

    PREPARING YOUR MANAGEMENT RIGHTS FOR SALE

    Tips, traps and strategies.

1. Plan ahead, as far ahead as possible. It may mean starting now.

    2. Stop tickling the till. $100 taken “black” will cost maybe $500 on sale.

    3. Start now if you want to try to change to an Accommodation module.

    4. Seek professional advice about extending your term if the remaining years have dropped to

    below 13 or so for an Accommodation module or below 7 for a Standard module. 5. Start a log of jobs you have done for free or jobs done outside your prescribed job

    description. This list may prove invaluable when you approach the Body Corp with any sale

    related requests.

    6. Have a set of For sale” accounts “prepared by an MR specialist accountant.

    7. Get all your 20a’s with assignment clauses in order.

    8. Have your solicitor ensure that your agreements are up to date.

    9. Have copies of B/Corp Agreements, Deeds of Assignments, Variations, Bylaws,

    Occupational authorities etc. available at hand.

    10. Consider updating the Body Corporate salary to current market levels for a complex of your

    size.

    11. Have inventories of office and equipment as part of the sale available to the agent. 12. Present the complex in a clean and tidy condition. 1st impressions count. Swimming pool

    sparkling and inviting.. NOT full of leaves and dirt.

    13. De-clutter the managers unit, it’s the buyers next home too.

    14. De- Clutter the office and have your systems on display: A business should look so well

    organized that the buyer is not daunted by taking it on.

    15. Deal only with brokers, solicitors and accountants who specialize in the management

    rights industry.

    16. Deal with a broker who can minimize the real cost of commission. RAAS RIGHTS have

    devised a legal way of achieving major tax savings in this area.

    17. Help the agent to help you. Let him take pictures to email to interstate and overseas clients

    (they won’t be published) and be ready to invest a little in the marketing of your major asset. 18. Leave the selling to the agent during inspections. Many an owner has shot a sale down by

    making an apparently innocent comment.

    www.raasrights.com.au 07 37112722

    19. Prepare some examples of where there is unrealised “upside”. E.g. I earned $12,000 last

    year that is not in these figures, by selling 2 units in the complex as a registered salesperson

    with RAAS Real Estate. Give a copy of the list to your RAAS RIGHTS salesperson.

    20. Educate yourself about multipliers. Stay in tune with the market by asking RAAS RIGHTS to

    you keep you posted on sales and listings that will have a bearing on the value and saleability of

    your complex. Keep a list of this information and assess how it impacts on your multiplier. (See

    below)

    THE MYSTERY OF THE MULTIPLIER

    Market Forces set the multipliers. Some forces, such as Interest Rate, Changes to legislation and broad

    supply and demand issues impact on the whole market. Generally however the risk profile of a business

    determines its multiplier, and as every business is different, every multiplier is as well. Some factors that

    determine the individual risk profile of your business are:

     The scale of the business: A $100,000 net business will have a lower multiple than a $400,000 net business

     Salary as a percentage of Net profit. While in the normal course, a large salary component will increase a multiple, if a disproportionate % of the income is salary this will result in a lower multiple.

     Module type. Accommodation or Standard. Accommodation modules command a higher multiple.

     Remaining term of the agreement. A low remaining term can adversely affect the multiple.

     The type of units in the pool (e.g. All big 3 bedroom units or small 1’s & 2’s) . If the units appeal too

    much to owner occupiers it can adversely impact a multiplier.

     The overall size of the complex (Max pool of 8 V max pool of 60) A bigger potential pool will command a higher multiplier.

     Composition of the letting pool (35 of 50 but 10 developer units in the 35.) Odd ownership situations can adversely impact the multiplier.

     The location e.g. for a holiday complex, right on the tourist strip or fringing suburbia. If the units appeal too much to owner occupiers it can adversely impact a multiplier.

     The physical condition of the complex. Generally poorly maintained complexes command a lower multiple.

     The price of the managers unit as a proportion of the whole investment. If the overall price is dominated by the unit price it will drive down the multiplier.

     The size of the managers unit. As long as the proportion mentioned above is reasonable a bigger unit helps maintain a good multiplier.

     Composition of the income. For example a disproportionate proportion of repairs and maintenance income will drive a multiplier down.

    www.raasrights.com.au 07 37112722

Report this document

For any questions or suggestions please email
cust-service@docsford.com