Real estate laws and ordinances can be hard to understand, or even overwhelming if you’re new to the process. Even more so in the hotel and resort space, with multiple owners and corporations sometimes being part of the deal. If you want to become involved in this world in a simplified but still lucrative way, one of the best places to start is by learning about management rights.
Management rights give an investor more control over the day-to-day aspects of running a hotel or resort. In exchange for your investment into the property, you live within the building (in some cases), oversee its care, and ensure its vacancies are filled. When successful, you’ll be able to pay off your investment with plenty of time left in your term or lease, and the profits from letting will go directly to you.
After your initial investment, you move into the property if necessary (some agreements don’t require you to live on-site). Management dwellings are typically larger units, and since you’ve already bought yours within the agreed upon investment amount, you don’t pay rent. If living on-site is unnecessary, charging more per guest for the larger space is a great way to pay off your investment sooner.
Another aspect of having management rights is acting as caretaker for the property. For a hotel or resort, depending on the size, this may mean hiring a cleaning service or other contract workers to keep the rooms you oversee clean and well-stocked with whatever amenities you offer. If it’s small enough or if you own fewer rooms, that could be something you handle yourself.
Keep in mind that most people who have management rights are also in charge of the grounds. Is the property on or adjacent to a golf course? The cost of maintaining 18 holes could be a deciding factor in not only whether or not you hire someone for that service, but also whether you want the management rights for a specific property. The same can be said for a beach front or mountainous commercial property.
One of the most appealing parts of management rights is the ability to meet people. You have a vested interest in making sure your rooms are filled, as this is where your profit is made. Marketing is required, whether it be online or through television, or simple word of mouth. To make your guests not only return again and again, but also tell their friends and family about your getaway, you’ll need to provide top notch customer service to them. This could be as minimal as listing local events and providing a mini-bar, or as involved as spending time with or planning outings for them. Providing breakfast, no matter how basic, can make an impression on people as well. Once you satisfy the terms of your contract, your filled vacancies are a direct profit for you. The sooner you’re able to do this, the more money you can make in the long-term.
Management rights on a commercial property can be a dream job. It’s a rent free way to live, with lots of opportunities to work with your hands or outside. As you may need contractors for upkeep in the building and on the grounds, you can network and make connections within your community. Your customers will not only provide a revenue stream, but give you a way to meet new people, perhaps from around the world. Gaining the management rights to a hotel or resort can bring challenges, but can also bring innumerable rewards.
