AN ENGLISHMAN BUYS HIS FUTURE
Londoner Dave Hallett has paid $550,000 for a job - and he couldn’t be happier.
He is one of the many men nearing retirement or past it, who want to live in the sun, but don’t not want to down tools and lie on the beach. Dave, 60, has bought management rights to a high-rise block of apartments on Queensland’s coast. He has a steady, reliable income; works from 8.30 AM to 4 PM, plays bowls a couple of days a week and has "a great life-style."
‘I worked for 30 years for an oil company and before that with Harland and Wolff, in London, the shipbuilders who built the "Titanic." We wanted to move away from Melbourne to a warmer climate. I didn’t want to retire and do nothing; I have always been too active for that.’
So Dave and his wife went to see Dave Allen, a real estate man specialising in the sale of management rights to blocks of Queensland apartments. He sold the couple the rights to the Kings Row Centre, with 65 units, half of them lived in permanently, 20 rented for a minimum of six months and the rest owned by overseas residents who visit once or twice a year, sit out their own winter and then lock their flats behind them. There are no holiday units.
‘Holiday letting means opening up apartments to people coming in on midnight flights, worrying about tours and linen, and working seven days a week. We didn’t want that. We haven’t gone into it to make a fortune. We mean to enjoy ourselves, with job security,’ says Dave.
Agent Allen has secured jobs and sunny lifestyles for a state Deputy Premier, bank managers, Air Commodores and their wives, all wanting an opportunity to remain in the workforce and have an income that avoids their life savings being eaten away.
He has sold $400m. worth of management rights in 1,500 buildings from Port Douglas to Coolangatta and is responsible each year for the sale of between 75%-80% of all Queensland high-rise rights, most of them on the Gold Coast. 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 on the Gold Coast. The rights to manage the still-to-be-built Sun City Resort have just gone for a colossal $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, telephone-charge margins, and the salary the body corporate of unit owners pays you for keeping the building spotless, organising the sinking fund; and - if you let holiday units - answering 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.’
Dave lectures at courses for rookie managers and tells them: ‘It’s all about matching people to people. Those who have worked all their lives in contact with people are all right; the ones who have been sheltered in a back room at a desk are a bit of a worry. When I bought my own rights years ago 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.’
Today the new high-rise managers have to learn how to administer budgets, understand letting agreements and the eviction process, and to make sure sinking funds correctly cover their forecast wear and tear. They have to be honest and tactful; be proud of the building they are looking after and be discreet about who has moved in with whom. It costs them $800 for a four-day intensive course.
Dave Hallett says: ‘My wife can get away and play golf twice a week after she’s done the book-keeping, and the owners are never a problem. We couldn’t be more contented.’
