Welcome to myComplex
Hello and welcome to beautiful myComplex. We trust your first impression was similar to our first impression which was “WOW” the first time we laid eyes on MyComplex. As you would have noticed during your walk around, MyComplex is a peaceful complex with plenty of space, beautiful trees and stunning gardens. Our complex is not like other complexes where each unit is built hard up against another unit and this is one reason we have plenty of tenants wanting to live here.
To live and work in this beautiful complex is an absolute pleasure.
We would like to thank you for taking the time to visit our complex and hope we have answered your questions. However if not, we have prepared this information booklet which should answer any other questions you may have. Of course should you have further queries then please do not hesitate to call, email or simply drop in for a visit.
Kind Regards
Troy & Davina 8 www.myComplex.com.au
MyComplex *
Contents
Welcome to MyComplex 1
Why prepare this document? 2
Why purchase MyComplex? 3
Reason for selling MyComplex 4
Rental pool 4
Training 4
Remuneration, expense and net profit snapshot 5
Management Rights Multiplier 6
MyComplex listing price and valuation breakdown 6
Remuneration, expense and net profit explained in detail 7
Benefits of MyComplex explained in detail 9
Future possible income 17
Why prepare this document?
Purchasing management rights is exciting! A large remuneration package with fantastic working hours! Managing a complex is considered the best lifestyle change one can make, however it is hard to take in all facets of a complex and business during an inspection. For this reason we have prepared this information booklet to make sure you go away with the knowledge of what our complex and business has to offer ensuring you make a well informed decision.
Even if you don’t purchase our complex we hope you find the information in this booklet useful when assessing other complexes and allow you to compare apples to apples.
MyComplex is located at xxxxxxxxxxxxxxx.
Why purchase MyComplex?
MyComplex is our third complex. We purchased MyComplex based on the fact that it had no pool, gates or BBQ area to look after, which increases the caretaking duties significantly. In addition myComplex has many other benefits compared to comparative complexes of this size. We have summarised the major benefits below:
Caretaking
· Low caretaking hours
· Flexible caretaking agreement with no schedule
· No pool to clean or police
· No grass collection
· No whipper snipping (edge trimming)
· No manicured gardens or shrubs
· No sprinklers to turn on and off
· No requirement to live on site
· No gates to breakdown
· No wheelie bins to clean or take to the curb
· No communal areas to clean
· Fantastic body corporate manager and committee members
· No parking restrictions
Management & Letting
· Standalone managers unit
· Standalone office
· No set office hours
· No cash collection
· Console trust account software installed
· Simplified End of Month (EOM) processing
· Simplified processes
· Mature long term investors
· Simple property maintenance
· Respectful tenants
In Addition
· No electricity bills
· Website www.mycomplex.com.au included
· Property maintenance van included
· 6x4 Trailer included
· Remote computer access to login to office computer from any computer in the world
· Full onsite training and after sales support from Troy & Davina
A more detailed description of the benefits listed above is included in the section “Benefits of MyComplex explained in detail” on page 9.
Reason for selling MyComplex
We have an opportunity to purchase a much larger complex together with our family where both families can participate in managing providing unlimited flexibility and lifestyle. Although we would like to retain MyComplex and employ a full time manager and caretaker, our bank is not supportive of us taking on a second investment of that scale.
Rental pool
MyComplex contains a total of 99 units and currently there are 78 units in the rental pool. Prior to our purchase of MyComplex, the previous managers increased the rental pool from 72 units to 75 units and we have increased the pool to 78 units. In addition we have fielded several requests from current owner occupiers in relation to managing their properties in the future.
Interested in selling your management and letting rights?
Email or phone 0416 060 372
Page 2 of 17
· 53 x 3 bedroom townhouse (~ $350/wk)
· 25 x 2 bedroom villas (~ $325/wk)
· 14 x owner occupiers
· 04 x self managed
· 02 x outside agents
· 01 x managers unit
Interested in selling your management and letting rights?
Email or phone 0416 060 372
Page 2 of 17
Training
When we purchased MyComplex, we were offered two weeks of training with the first week provided prior to settlement and a second week after settlement, if required, which we did not.
Our proposal to you is to provide two weeks of training prior to settlement including performing our final End of Month (EOM) processing and then to be available for one month after settlement which will coincide with your first EOM processing. We can provide any simple property maintenance training you believe is required. During property maintenance training, we will not invoice the owner/tenant for any maintenance performed and instead allow you to invoice the owner/tenant during your first month of operation.
Finally just as we have kept in touch with previous MyComplex managers, we also will be contactable via phone, email or in person (if required) to answer any future queries you may have, or just to say hello.
Remuneration, expense and net profit snapshot
The remuneration for MyComplex is divided into caretaking salary, management & letting and additional earnings as summarised below. All figures presented (excluding some fees) are exclusive of Goods and Services Tax (GST) and when invoiced are increased by 10%.
Remuneration (excluding GST) / Yearly amountCaretaking salary[1] (mowing, tree trimming etc) / $90000.00
Letting earnings (new lease let and re-let fees) / $20000.00
Management earnings (5% rent collection + 2.5% management) / $100000.00
Simple property maintenance / $20000.00
Smoke alarm maintenance / $2800.00
Sundries (bank fees, postage, printer supplies, telephone) / $2800.00
Third party commissions (landlord insurance, direct connect etc) / $400.00
Unit cleaning, carpet cleaning and pest control / $12000.00
Remuneration total (exclusive of GST) / $248000.00
Expense / Yearly amount
Accounting & trust account audits / $2500.00
Bank account fees / $800.00
Caretaking trust account software (Console) / $2000.00
Cleaning / $500.00
License (single licence) / $700.00
Motor vehicle / $1040.00
Public liability & professional indemnity insurance / $2600.00
Simple property maintenance hardware / $2500.00
Sundries (postage, printer supplies, stationary) / $500.00
TPG Telephone & internet / $1000.00
Expenses total (exclusive of GST) / $14140.00
Net profit / $233860.00
A detailed breakdown of remuneration figures is shown under the section “Remuneration, expense and net profit explained in detail” on page 7.
In addition to the above figures, we receive commission for Unit Sales and also rent the managers unit to a night manager for $350 per week. This additional income is NOT included in any of our figures above.
Management Rights Multiplier
The multiplier is a number which is applied to the net profit to determine the value of the management rights component of the business. Multipliers can range from as low as 3 and as high as 6.5 however can vary outside these limits depending on the specific merits of a business being sold.
As a guide the following multiplier values are commonly accepted by industry:
· For a net profit below $100,000, a multiplier of less than 4 may be expected
· For a net profit between $100,000 and $200,000, a multiplier between 4 and 5 may be expected
· For net profit greater than $200,000, a multiplier of 5.0 upwards may be expected
Apart from net profit, a higher multiplier will indicate the ease of earning the specified income whereas a lower multiplier may indicate the income is more difficult to achieve (ie due to more hours required or difficult owners/body corporate committee to deal with etc).
The benefits of MyComplex simply cannot be compared to any other complex of this size. The low amount of work and ease of generating income coupled with an easy to work-with body corporate committee makes this complex an effortless and absolute delight to manage.
For MyComplex, the multiplier being applied to the net profit is 5.0.
MyComplex listing price and valuation breakdown
The following table shows a breakdown of the MyComplex business and how our listing price is derived.
Management & caretaking component / AmountManagement rights ($233000.00 x 5.0) / $1165000.00
Office equipment (computer, printers, furniture, software, stationary) / $2000.00
Equipment (ride on mower, mower, chainsaw, garden tools etc) / $1000.00
Property maintenance van, trailer, stock held in van and sheds / $2000.00
Management & caretaking rights total / $1170000.00
Managers unit 3 (with 3.5KW solar system) and standalone office / $410000.00
MyComplex listing price / $1580000.00
Remuneration, expense and net profit explained in detail
Caretaking
Prudential Body Corporate Services is the body corporate manager responsible for administering our caretaking salary (inclusive of GST) per year which equates to $7,500.00 (inclusive of GST) per month paid in arrears.
· Annual caretaking salary for 2012 : $88000.00 (exclusive of GST)
· Annual caretaking salary for 2013 : $90000.00 (exclusive of GST)
· Annual caretaking salary for 2014 (estimated) : $92500.00 (exclusive of GST)
The caretaking salary is increased at the start of each year by CPI. It is important to note that should CPI ever be negative, the caretaking salary will remain equivalent to the previous year.
Management and letting earnings
Management & letting earnings are based on a 12 month period of operation and exclusive of GST. All fees and schedules charged are in accordance with each individual PAMD 20a property management agreement:
· Management earnings: 5% rent collection plus 2.5% property management (ie organising repairs, inspections, payment of bills etc) which is a total of 7.5% (exclusive of GST)
· Letting earnings: first weeks rent for new lease and re-let fees for lease renewal
- Last 12 months of letting earnings:
- In 2011 we turned over 35 units.
- In 2012 we turned over 39 units.
- The average tenant stays at MyComplex for a two year period. This means that on average we expect 38 unit turnovers per year which is healthy for the complex and business.
· Sundries: a fee of $5 per month (exclusive of GST) is charged to owners to cover bank fees, postage, printer supplies and telephone and internet requirements etc.
· Smoke Alarm Maintenance: in accordance with our PAMD 20a management agreements an annual fee of $45 per month (exclusive of GST) is charged to carry out smoke alarm maintenance.
Additional Earnings
Additional earnings include unit sales, simple property maintenance, unit and carpet cleaning and third party commissions.
· Unit sales: to protect our rental pool we sell units on behalf of owners including units that are managed by outside agents. This ensures that we can, where possible, sell the unit to another investor thereby maintaining our rental pool or even increasing it. We work with RAAS real estate to complete the sale and share 46% commission on each sale.
- Last 12 months – 3 unit sales:
- Note: Unit sales are not included in our figures presented
- Note: You require a sales licence or full real estate license to sell units
· Simple property maintenance: as the complex is close to 20 years in age, regular maintenance is required in order to keep units to a high standard and maximise an owner’s rental return. Most maintenance tasks are quite simple and can be done by the manager which is provided at a discounted price. If we cannot provide the service (for example electrical work) then we organise a professional. It is important to note that the majority of income earned carrying out simple property maintenance is through the labour component and that the cost of hardware to complete property maintenance is relatively inexpensive.
· Unit cleaning, carpet cleaning & pest control: when a tenant moves out, carpet and pest control is mandatory. If the carpet has been well looked after and is easy to clean then we offer our cleaning service. Likewise if the unit is also relatively clean we offer our cleaning services. If the unit looks as though it requires a lot of cleaning, we organise a contractor.
· Third party earnings & commissions: third party commissions are allowed provided they are fully disclosed which we do via our PAMD 20a management agreements. By helping a tenant set up electricity, phone and internet services we receive commissions through Direct Connect. We also receive yearly recurring commissions for owners that have taken out landlord protection insurance as a result of us recommending the insurance product.
Benefits of MyComplex explained in detail
Caretaking
· Low caretaking hours
- Our caretaking duties include mowing, picking up fallen palm fawns, occasional sweeping/blowing of car-parks and gutters, monitoring bin areas for fallen rubbish and tree or shrub trimming as required. As there is no pool to clean or police, no gates to breakdown and no communal areas (ie BBQ/tennis court) to look after, the caretaking duties are considered light and are easily completed in less than 2 hours per day or one day a week.