Structuring Your Management Rights (MR) Partnership

If you're considering purchasing a management and letting rights business, whether it's your first time or you're an experienced owner, structuring your investment as a partnership can offer significant advantages. One key benefit is the ability to acquire a larger business by leveraging additional capital from silent investors, which can enhance your return on investment and provide greater opportunities for capital growth.
Example 1: Investing with $500,000

Option 1:

• Purchase Scenario: You can buy a management and letting rights business for up to $1,400,000. If the residence is valued at $700,000, the business could generate approximately $140,000 per annum in income (before interest). After interest payments, your income would be around $49,000 per annum.
• Considerations: This option you'll be handling all responsibilities on your own, with no staff support. Essentially, you're buying yourself a part time job can only supplement your family income, which may limit your potential for capital growth.

Option 2:

• Partnership Structure: With your $500,000 investment, you could become a working manager in a partnership structure, potentially receiving $75,000 from profit distribution (after interest payments) and an additional $86,000 in management fees. Your total income could reach $161,000 per annum.
• Considerations: While this option you'll benefit from staff support and advice from partners, along with higher income and greater growth potential.

Example 2: Passive Investment with $1,000,000
Option 1:

• Purchase Scenario: Invest $1,000,000 to acquire management rights for around $2,800,000, generating a net income of $491,000. After hiring a manager for $75,000 and accounting for apartment use, your return after interest could be approximately $219,000 per annum (21.9% ROI).
• Considerations: While this return is attractive, the risk lies in management turnover, which can disrupt operations. Additionally, concentrating all your investment in a single business exposes you to greater risk if the business underperforms.

Option 2:

• Diversified Partnership Investment: Invest your $1,000,000 across two or three management and letting rights businesses within a partnership structure. Your return could be around 19%, but with diversified investments, reducing risk. The managers in these businesses would have a financial stake, increasing their motivation and accountability, while you enjoy the benefits of being a 'silent' partner. Other silent partners with industry experience can provide a valuable support network for handling management, body corporate issues, licensing, marketing, filling in during staff turnover and day-to-day operations.

What is my personal Partnership's structure looks like?

In a partnership structure:

• Ownership: The agent company owns the asset, borrows the funds, holds the corporate license, and operates the business on behalf of the partnership.
• Unit Trusts: Can be set up to allow self-managed super funds to invest, subject to legislative requirements.
• Licensing: Only the managing partner needs to hold a license. Although the agent company is the borrower, each partner signs a guarantee limited to their share of the debt.
• Ideal Manager: A person with a strong work ethic, effective staff management skills, and a collaborative approach to sharing rewards with partners.
• Ideal Silent Partner: An individual willing to take business risks for high returns, with experience in or knowledge of the management and letting rights industry. They should be comfortable letting the managing partner handle operations but ready to contribute when necessary. A minimum investment of $300,000 for smaller partnership and $500,000 for larger ones is typically required, with self-managed super funds eligible for investment.

Selecting the Right Business for a Partnership

Key factors to consider:

• Location
• High Net Maintainable Income: At least $400,000.
• Income Growth Potential
• Accommodation Module
• Low or No Real Estate Percentage: Compared to the total price.
• Competition

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Our company has over 12 years of experience facilitating partnerships, and while we've encountered numerous scenarios, new challenges and opportunities always arise in business. Although no investment is fool proof, working with a management rights broker specializing in partnerships can help you achieve your goals, whether as a working manager or a silent investor.
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Disclaimer: The above information is for general guidance and should not be considered as financial advice. Each investment decision should be made based on individual circumstances.

Management Rights Partnership Structure

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The partners receive distributions from the partnership business. The partners individually report their share of parentship profit in their own tax return, with interest expense and report future capital gain. Each partners tax and ownership structure is not affected.

Partnership Opportunities

Silent Partners / Super funds required

Brisbane Mixed Building 
Net Income $500,000

Gold Coast Permanent Complex
Net Income $884,000

Managing Partners Required

Brisbane CBD 

Minimum investment $150K

For ROI Details, call 0404 331 310 ​and joining the most experienced team in partnership in the industry, established & trusted for 12 years.