His advertising is seductive. "The Great Australian Dream. Always wanted to live on the Gold Coast? Here’s a fabulous opportunity...Good solid business with lots of repeat bookings located in the hub of popular Broadbeach. Netting over $90,000 and asking only $475,000 - be quick, this won’t last." (- Real estate advertisement.) __________________________________________________
Dave Allen, a 65-year-old ex-Army officer, sits in his Gold Coast, Queensland, office explaining to anxious superannuated southerners, the redundant and the retired, how he can give them new lives.
A Deputy Premier, bank managers, Air Commodores and their wives, have all faced Dave across his desk - searching for the same thing: the warmth of the sun forever, with some sort of a job to prevent their savings being eaten away. He’s been able to give them that - and even the chance of becoming wealthier a few years down the track: by purchasing management rights to high-rise units.
In 1977, after his last soldiering stint in Papua-New Guinea, Dave and his wife, Shirley, decided the sun-splashed Gold Coast was what they wanted. But selling real estate was about all that was offering a professional ex-colonel in his 40s., bitter about Australia’s attitude towards its Vietnam veterans. "I’d heard about management rights, which had been adopted from America. Instead of a high-rise building having half a dozen different letting agents handle its business, some had installed manager/caretakers who bought a unit, had the use of an office, and looked after all the rentals." Dave bought the rights to one in Riverpark Towers and it cost him $95,000. When he had tidied the garden and passageways and sent his tourists off for the day he had time to slip across to an estate office and sell the Coast.
Today, operating as Dave Allen Real Estate, (‘the biggest little agency in town’), and working out of the same corner office on Chevron Island he’s had since 1979, Dave has notched up some $400m. worth of management rights in 1,500 buildings from Port Douglas to Coolangatta; he is responsible each year for the sale of between 75%-80% of all Queensland high-rise rights, most of them on the Gold Coast. "If I wanted to get back to Riverpark Towers today it would cost me $600,000," muses Dave, who says he’s retired three times but can’t give up coming to the office. One of his staff sold $15m. worth of rights in a year and last May Dave clinched his biggest deal - $2.5 m. for the 140-unit Beachhaven at Broadbeach. The rights to manage the still-to-be-built Sun City Resort have just gone for $3.4 m.
Buying management rights means buying a unit in the building you’re going to work in, (‘2-3 bedrooms depending on how many children you have coming up for holidays’); and covers a premium for the profits you expect to make from rental (12% for holiday letting, 7.5% for permanent lettings), and tour commissions, PABX margins, and the salary the body corporate of unit owners pays you for keeping the building spotless, organising the sinking fund to cover wear and tear; and to answer the door cheerfully at 2 am when a tourist, feeling no pain, has lost his keys.
Management rights are pitched at roughly 3 1/2 times the nett annual profit. For $400,000 you get a manager’s unit worth $200,000 and the business, bringing in about $80,000 nett. On top of that there is the caretaker’s wage paid by each unit owner as a body corporate charge. Dave’s rule-of-thumb is that the profit expected will be about $5,000 per high-rise holiday letting unit per year, and $2,000-$4,000 per low-rise holiday letting unit, depending on the quality and age of the units. Buying rights in a new building, he points out, can mean big future capital gains when you’re ready to retire yourself or move on to a bigger building. He cautions would-be managers to borrow no more than 50% of the cost of their rights. "I worry about what happened to interest rates in 1989.
"It’s all about matching people to people," Dave explains, at the four-day courses where he lectures to clients who have purchased. "Those who have worked all their lives in contact with people are alright; the ones who have been sheltered in a back room at a desk are a bit of a worry. When I bought my rights there was no legislation at all to cover this type of activity. All you needed was a real estate agent’s licence to allow you to let property."
It’s different now. The course in Resident Unit Management, where he lectures - run by the Real Estate Institute of Queensland - carefully covers everything from letting agreements to the eviction process; it instructs new managers how to administer budgets and sinking funds; to be skilled in forecasting the rate of wear and tear and budgeting ahead for replacements that need to be made; marketing and promotion - and how to get on with owners. To be honest, tactful, patient with owners and holidaymakers; to be unafraid of work (at all hours), be proud of your building and handle confidential matters (like who has just moved in with who), with absolute discretion. It costs about $800.
"In a property that has a mix of letting units and resident owners there are sometimes differences that arise - particularly in the Christmas holidays when the resident owners start complaining about the noise," Dave says. "If there’s been a party in a unit and people have complained, the manager must demonstrate that he has done something about it."
Managers and buildings get on best if they are well matched. A retired bank manager came to Dave and said he was ‘mad about’ gardens and loved boats. Dave sold him the rights to a small building, which offered him a comfortable unit, a prize-winning garden, a marina and an income of $35,000-$40,000 a year. "He’s as happy as a lark."
The price paid for rights can depend on the style of living the purchaser wants; a large comfortable unit might be combined with a small income in a building where there is no holiday letting, or it could be a small, nondescript unit in a busy holiday high-rise that brings in a large income. Advertisements in southern newspapers spark the dreams that Dave hopes to make come true. "I advertised in the Sydney Morning Herald and a newsagent handling the paper rang me. He’d just sold his business and he bought the one I advertised. A guy in Port Douglas read my ad. in a southern paper and bought the rights to a building across the road from him. He didn’t know they were for sale."
Dave is honest enough to point out that the idea of working on the Gold Coast means basking in the winter sun ‘is a bit of a myth’. "I get to walk the dog on the beach at dawn and I’ve got a boat I never get time to use. And I’ve got friends all over Australia who drop in and can’t understand why I don’t leave the office with them to party day and night. They reckon just because we live here we must be on holiday."
