(Short term accommodation project in Gold Coast Region)
Sources of Income
The income from management rights is mainly derived from two sources with a variety of significant additional revenue streams.
1. Management Fee. The management fee is the salary paid via the body corporate for the caretaking duties as per the caretaking agreement that is inherited when a management rights is purchased.
In most cases a detailed schedule outlining the daily, weekly, monthly KPIs and tasks is listed within the schedule of the caretaking agreement.
Each owner of a community tiles scheme (of a unit) must pay body corporate levies according to the distribution as set from the scheme, and a proportion of that payment is the caretaking salary.
Salary is guaranteed via agreement which in turn is protected via the BCCM (body corporate and community management) Act. In majority of cases a protection clause guarantees the management fee to increase with the YoY CPI inflation or an agreed % increase per annum whichever is higher. The term (maximum of 25 years) is also agreed upon with options to extend. Each year the business owner has the right to top up the agreements in 5 year increments back to the original 25 years max term, provided they receive the majority of votes from the owners agreeing to such.
Very broadly speaking, it is relatively more secure to invest in an asset that derived the majority of its income from the management fee.
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