Thinking About Buying Management Rights? Read This First
Management Rights can look attractive from the outside: a business, a residence, and long-term income all wrapped into one. But as many operators discover too late, the reality can be very different if the structure, the people, or the agreements are wrong.
Before we go any further—and before you assume we are a Management Rights Specialist—we’re not. Our speciality is Motel Management Training and Consultancy Services.
We intentionally leave Management Rights to people who have earned their experience in this space and understand the subtleties that can make all the difference. This guide is designed to give you initial, practical insight into Management Rights and, more importantly, to highlight why getting the right advice early matters.
Having worked as a Cluster General Manager in a Management Rights building, I’ve seen firsthand how fragile these environments can be—and how quickly things deteriorate when relationships with the body corporate or strata manager become unconstructive.
What Are Management Rights?
Management Rights typically involve purchasing two things together:
A caretaking and/or letting business
A manager’s unit (often mandatory)
In most cases, the owner is contracted by the body corporate to:
Maintain common property
Provide caretaking services
Sometimes manage on-site or off-site lettings (depending on the agreement)
These agreements are usually long-term—often 10 to 25 years—and the value of the business is directly tied to the remaining contract term.
Key Characteristics of Management Rights
Long-term caretaking agreement with the body corporate
Our feedback: If you don’t have a good relationship with your body corporate, you will always be in a tug-of-war over your caretaking agreement.Defined duties listed in a caretaking agreement
What’s written—and what isn’t—matters more than most buyers realise.Exclusive or optional letting rights
How you are perceived by residents and owners directly affects how easy it is to manage the letting pool. Pay close attention to the proportion of permanent residents in the building. High permanent occupancy often means less support for increasing short-term letting (Airbnb, Booking.com, Expedia, etc.).Business value heavily dependent on contract length
Even a well-run business can lose value quickly if contract renewals are poorly managed.You operate inside a community, not just a business
Financial performance is tied, in part, to resident satisfaction. When caretaking standards are high and relationships are positive, opportunities to grow the letting pool tend to follow.
This is not a passive investment. It is an operational role with politics, compliance, and people management built in.
Major Pitfalls to Be Aware Of
This is where many buyers get caught out.
Body Corporate Relationships
The single biggest risk is a poor or deteriorating relationship with the body corporate committee.
Committees change
Personalities clash
Expectations drift beyond the written agreement
Once the relationship turns unconstructive, daily operations become stressful, time-consuming, and emotionally draining.
Ambiguous or Outdated Agreements
Caretaking agreements that are:
Poorly written
Too broad
Silent on limits of duties
…can quietly expand your workload without compensation. If it’s not clearly defined, expect pressure to “just do it anyway.” The remuneration for the agreement can be recalculated, and tasks that fall outside the agreement can be charged in addition. It is critical to develop a good understanding of the relevant legislative framework, such as the Body Corporate and Community Management Act in Queensland.
Underestimated Workload
Many first-time buyers underestimate:
After-hours demands
Emergency call-outs
Committee meetings and disputes
Compliance and reporting obligations
This is especially common in mixed-use or high-density buildings.
Over-Reliance on Letting Income
Letting pools can shrink.
Owners can leave.
Competition can increase.
If the business only works financially with near-full letting participation, that risk needs close scrutiny.
Exit Risk
Resale value depends on:
Remaining contract term
Body corporate satisfaction
Clean compliance history
A strained relationship can make selling far harder than expected.
Key People You Should Speak to Before Buying
Buying Management Rights is not a solo decision. You need independent advice from people who genuinely understand the space.
Before you even start looking, you should:
Confirm you have the correct licences
Undertake proper trust accounting training
Management Rights Specialist (Broker)
A specialist understands:
Fair market pricing
Red flags in agreements
Committee history
Contract renewal risk
This is not a general business sale. Specialist experience matters.
Management Rights Lawyer
You need a lawyer who works specifically in Management Rights—not just commercial law—to review:
Caretaking agreement
Letting agreement
Duties schedule
Term, extensions, and termination clauses
Accountant With Industry Experience
They should stress-test:
True net income
Wage substitution assumptions
Sustainability of letting income
Realistic owner workload
Existing or Former Managers
Where possible, discreetly speak with:
The current manager
A previous manager
Managers in similar buildings
This is often where you’ll get the most honest insight.
Final Thoughts: Go in With Eyes Open
Management Rights can be a solid business in the right building, with the right agreement, and the right people involved.
Once operating, training and support become critical, particularly around trust accounting, and compliance. For specialist support in this area, we recommend McCarthy Management Rights Services, who provide a wealth of Management Rights Experience.
Management Rights can also become a long-term source of stress if:
The body corporate relationship breaks down
Duties are unclear
Expectations exceed the contract
The operational reality is underestimated
Education and specialist advice upfront can save years of frustration later.
If you’re considering Management Rights, make sure your advice comes from people who understand both the numbers and the lived reality of operating inside a body corporate environment.
