Tips for Buying Off The Plan

TIPS FOR BUYING OFF-THE-PLAN

Buying off-the-plan management rights:

What smart buyers get right how the letting pool is built.

With that opportunity comes a different risk profile. The letting pool isn’t fixed. The investor mix isn’t final. Rental performance is based on forward assumptions.

That’s why discipline, structure, and the right advice are critical.

Nathan Eades, National Director, Management Rights & Accommodation, Ras360° Property Solutions

Off-the-plan (OTP) management rights sit in a unique corner of our industry. They’re often positioned as an entry point or a value play, but in reality, they’re something quite different: a business build, backed by a development.

That distinction matters.

Having worked across these transactions as both a broker and operator, the buyers who achieve the best outcomes are those who understand this early. They approach it as an opportunity to build a business from the ground up, with the right structure and protections in place.

When you buy off-the-plan, you’re committing to a future income stream rather than a proven one. The transaction is typically agreed with the developer well before completion, with pricing based on projected income rather than historical performance. That places a premium on understanding how the deal is structured and how those projections are built.

The upside is what makes OTP compelling. Unlike established management rights, where you inherit existing systems and constraints, OTP gives you the ability to influence how the business is set up from day one. If you engage early, you can materially influence layout, operations, systems and even

With that in mind, these are the areas I’d be focusing on when assessing an OTP opportunity.

Tip #1: Understand and validate the income projections Income projections are central to any OTP transaction.

Typically prepared by specialist industry accountants or experienced brokers, they are based on comparable assets, market evidence, third-party rental projections, presale-investor versus owneroccupier mix and achievable operating assumptions.

When properly prepared, these figures are not arbitrary; they reflect what a well-run business should be capable of delivering.

That said, they remain projections.

A common misconception is that OTP represents a “cheaper” way to buy. In reality, you’re buying earlier in the lifecycle and taking on a letting pool that you have to secure, rather than inherit as part of the purchase.

OTP assets generally transact at a slightly softer multiplier than established complexes, reflecting the fact that the income needs to be built. The trade-off is that you’re the one creating that value over time.

Tip #2: The letting pool is everything The letting pool is the single biggest driver of performance, and in OTP, it’s not guaranteed.

Each individual owner decides how their property is managed. Your ability to secure and retain those appointments will determine how the business performs.

Strong operators take a proactive approach: •

Engaging early with developers and project marketers.

•

Understanding the likely buyer profile.

•

Positioning themselves as the preferred letting agent from day one.

As a buyer, you should: •

•

•

Understand the key assumptions (letting pool estimates, occupancy, rental appraisals).

Ensure they align with current market conditions and comparable sales.

Have your own accountant independently review the figures.

The objective isn’t to challenge the numbers unnecessarily, but to fully understand what drives them.

If the assumptions are sound, and in most well-structured deals they are, you can proceed with confidence that the income is both realistic and achievable.

Your broker should be able to break these projections down, explain the process in detail, and walk you through the numbers so you are comfortable with them.

© 2026 Multimedia Publications Pty Limited • Phone 07 5440 5322

If you wait until settlement to build those relationships, you’re already behind.

Tip #3: Get the agreements right (non-negotiable)

•

Letting rights and authority.

•

Term and extension options.

•

Remuneration structure and increases.

This is not an area to compromise.

Specialist legal and advisory input is essential. Poorly drafted agreements can impact finance, reduce value, and create longterm operational issues.

Tip #4: Build in protection (sunsets and structure) Development risk is real.

Timelines shift, staging changes, and not every project proceeds as originally planned.

That’s why contractual protection is critical, particularly sunset clauses.

You should clarify: •

Delivery timeframes.

•

Exit rights if timelines aren’t met.

•

Protection across staged developments.

Equally important are claw-back and claw-forward provisions, which ensure the final purchase price reflects the actual letting pool delivered. Well-structured contracts protect both sides and give you certainty as the project evolves.

Tip #5: Understand the finance reality While lenders are generally supportive of management rights, OTP transactions are assessed as start-ups.

In practical terms, this means:

In management rights, the agreements are the asset.

•

OTP transactions are not based on standard contracts.

Each deal is bespoke, which means the detail matters.

Check lending LVRs with experienced MR finance brokers.

•

Greater emphasis on your experience and capability.

•

Additional requirements may apply such as bank guarantees or funds held in trust for future adjustments.

Your agreements must clearly define: •

Caretaking duties and scope.

RESORT NEWS - APRIL 2026

TIPS FOR BUYING OFF-THE-PLAN

Property prices, rental pressure and government incentives have seen an influx of owneroccupiers into the market. Ensure you are the preferred property manager when they consider a shift to investment letting or when they decide to sell.

OTP management rights remain one of the most compelling opportunities in the accommodation sector

You also need to account for GST, equity contributions, and working capital during the lease-up phase.

The right finance structure is critical. Done well, it gives you flexibility. Done poorly, it creates unnecessary pressure from day one. Speak to finance experts in the OTP space. They are the experts for a reason.

Tip #6: Treat the developer meeting like a job interview In OTP transactions, the developer is effectively selecting an operator, not just selling a business.

You are being assessed on your ability to: •

Lease the building efficiently,

•

Maintain the standard of the asset,

•

Enhance the overall value of the development.

The strongest buyers come prepared, with a clear plan and

a strong understanding of the asset. That preparation not only improves your chances but can strengthen your position in negotiations.

Tip #7: Understand how you get paid Income in management rights typically comes from two sources: •

Body corporate remuneration (caretaking salary).

•

Letting and management income.

In OTP deals, the salary is defined upfront in the body corporate budgets that form part of the lot owners’ disclosure documents.

The letting income is where the upside sits but it’s also where performance matters most.

Tip #8: Be ready to build the business and defend it!

OTP management rights are not

passive. The first six to 12 months post-settlement are critical.

You’ll be: •

Leasing up a significant volume of stock.

•

Establishing systems and processes.

•

Building relationships with owners.

•

Delivering service from day one.

•

Under pressure from external agents targeting your complex for sales and rentals.

This is where experienced operators stand apart. You’re not stepping into a finished business; you’re building one. From day one (and even before settlement), external agents will be looking to capture opportunities from your investment. Having a system in place to secure reliable referrals from investor buyers to your management business is not optional; it should form part of your business plan.

The managers who build the strongest businesses in year one are those who treat defence, growth, and new revenue streams as equal priorities from the day contracts are signed, not as afterthoughts once the pressure arrives.

OTP management rights remain one of the most compelling opportunities in the accommodation sector when approached correctly, offering entry at an earlier stage of the asset lifecycle, the ability to shape the business and strong long-term upside.

This is why it needs to be approached in a structured way: as a business backed by a development. With the right mindset, skill set and people around you, it can be a highly rewarding investment.

Ras360 is a leading OTP Management Rights brokerage, with a specialised residential sales division that helps managers defend, build and reward their business.

DEFEND | BUILD | REWARD

Over $1,000,000

paid to our partners in the past 3 years Want W Wa nt to sell units within your Management Rights?

Concerned with outside agents devaluing your business?

W specialise in sales and rental solutions We for managers to grow their investor pool & inc income come Our specialised apartment and tow townhouse o nhouse sales team wo ow w work rk closely with our Broke Brokers k rs ke your key value your to secure yo y ur rent roll, generate referral fees and long-term ke k ey va ey v lue for yo y ur business. © 2026 Multimedia Publications Pty Limited • Phone 07 5440 5322

RESORT NEWS - APRIL 2026

TIPS FOR BUYING OFF-THE-PLAN

The 10 best tips to consider when buying off-the-plan There are a number of reasons why people want to buy management rights off-the-plan.

Never sign an off-theplan management rights contract without expert legal and accounting advice. These contracts are never standard

It is often perceived as an opportunity as there is an expectation that: •

The multiplier will be lower when buying from the developer.

•

The profit could ultimately be a lot higher than that projected by the developer (especially for shortterm accommodation).

It is also important that there is no duty on the initial grant of the management rights, although there is still duty on the unit.

Although there is GST on an off-the-plan management rights acquisition, the GST is eventually remitted to the buyer as an input tax credit.

While the legal fees and general delays can be much greater than a normal purchase, the duty-saving more than makes up for that as the duty can be over five percent of the price!

Of course, there are also risks in buying off-theplan. But if the items in this article are considered and acted upon, the risks can be substantially minimised.

Tip number one Trust but verify. The agent and the developer can be an excellent source of information.

But, it is critical to distinguish between information and ‘blue sky’. Information can be verified, blue sky cannot.

Blue sky includes, for example, exaggerated estimates about likely rental or occupancy rates. It is important to identify, check and verify any important assumptions about the business. Do your market research to make sure that the projected rentals are realistic,

Amy O’Donnell, Partner, Mahoneys

especially in a saturated market. Get good advice from an accountant with expertise in management rights to help with the verification.

Critically, make sure that the complex will qualify for the accommodation module (and consequential 25-year agreements) if that is what has been offered. You need to be certain that at settlement a majority of owners are intended to be investors who will rent out their units.

Tip number two Deal with competent and respected people and get good advice early. Importantly, the first person you need to check out is yourself!

Do you have the skills to bring this kind of business together?

Permanent complexes are fairly straightforward. Many of my existing clients hear about a holiday building years before it is completed. Developers often approach experienced managers directly. Warning bells should ring if you have no experience and come across a major holiday or short-term building six weeks before it is to be finished!

Never sign an off-the-plan management rights contract without expert legal and accounting advice. These contracts are never standard.

Dealing with an experienced

© 2026 Multimedia Publications Pty Limited • Phone 07 5440 5322

management rights agent is important. Remember though they are the developer’s agent.

Nevertheless, experienced agents will not want to risk losing a sale or your future patronage and will usually be honest with you. But remember those agents are not solicitors or accountants! They cannot provide all of the detailed advice that you will need before the contract can go unconditional.

Tip number three In principle, get agreement from the developer to a clawback.

It is important that in principle agreement be reached on critical items such as price, clawbacks, minimum numbers of units in the letting pool to settle and any obvious due diligence issues, before a contract is signed. We have seen many transactions fall over, after a buyer has spent considerable time and money, because the basics were not agreed to at the outset. While the final contract will, of course, be quite detailed, it is critical to get a sound in principal agreement up front.

We have a comprehensive checklist that we use for working out a clawback/claw-forward arrangement. Working these out at the beginning of the matter as part of reaching in principle agreement with the developer

can save time, money and angst.

Tip number four Check out the developer and its selling agents. Ideally the developer will have a good track record, make sure you find out about the developer’s other complexes and speak to the managers of those buildings.

What support will the developer offer you? This could include marketing support for websites and advertising, and assistance with identifying and rectifying building defects. Managers often need to spend significant time and money setting up the business and fitting out the office in the months leading up to settlement. Who are the agents selling units in the complex? What have they promised the buyers? Obtain copies of marketing material.

Tip number five Obtain copies of the offthe-plan unit sale contracts and disclosure statements.

The developer and its selling agents should have copies of these to provide to you. These documents should have all sorts of useful information: copies of survey plans, floor plans, budgets, lists of inclusions, caretaking and letting agreements, by laws and so on.

RESORT NEWS - APRIL 2026

TIPS FOR BUYING OFF-THE-PLAN

Tip number six

Tip number eight

In carrying out initial financial due diligence, find out the likely settlement time frame?

Is there enough time to obtain letting appointments from owners? Enough time to find tenants? Some marketing and advertising needs a long lead-in time especially in holiday buildings. Often, the developer or its selling agent will provide you with a projected profit and loss statement. That projection will usually be for the second or even the third year in a holiday complex.

Initial legal due diligence: you should make sure your lawyer has a copy of the unit contract and disclosure statement very early in the negotiations.

As above, make sure your own accountant verifies the projections and identifies and checks any underlying assumptions. It could take some months to fully tenant a permanent complex. My clients tell me it can easily take 18 months or more to achieve projected occupancy levels in a holiday building.

Projected profit does not equal cashflow! Depending on the size of the complex, net cash flow (before interest) could be 10 percent or more below projected net profit. Your accountant should prepare a separate cash flow forecast.

Tip number seven Establish price calculation and related assumptions. What is the breakdown between body corporate remuneration and letting income? What expenses have been allowed for? What is the expected occupancy? What are the other income sources (electricity supply, internet services, parking fees)? Is it appropriate that those income sources be included in the projections for sale purposes?

Nobody ‘buys’ GST. The figures quoted for remuneration and the off-the-plan management rights price are usually plus GST. The unit price would normally include GST. One of the things that you need to determine is how much each unit is worth in the letting pool. For example, if the projected letting income from a unit is (say) $6,000 and the multiplier on your purchase is 4.5, then that unit alone is worth $27,000 to your letting pool.

There will be items of critical importance that need to be resolved before the contract can be signed. Your lawyer should identify any immediately obvious issues in the agreements. Developers’ solicitors frequently use ‘off-the-shelf’ caretaking and letting agreements. Often, we see permanent townhouse complexes with agreements that seem drafted for a highrise holiday building and vice versa. High risk items that might need to be considered include, for example, strict office hours, or work that is of a specialist nature.

Are the duties, office hours and remuneration appropriate?

What are the rubbish removal arrangements? Is it a holiday or permanent complex? Are the courtyards accessible for maintenance? What degree of office fit out will the developer supply? Consider PABX, internet, electricity supply, car parking, furniture packages and the like.

Developers are usually highly reluctant to make any changes to the caretaking and letting agreements. That is because any changes have to be disclosed to all the other buyers.

If those buyers are materially prejudiced by the changes, then they are allowed to terminate their contracts. Developers usually don’t want to risk that.

It is important for buyers of off-the-plan management rights to distinguish between their ‘wish list’ and ‘deal breakers’.

Given the understandable reluctance developers have to making amendments to the documents, be careful not to seek many amendments beyond those that are deal breakers.

Tip number nine What are the minimum available units in letting pool at settlement? A critical question that is sometimes ignored is, “how many units do I need in the letting pool to settle?”

© 2026 Multimedia Publications Pty Limited • Phone 07 5440 5322

You can have the best clawback clause but if there are not enough sales to investors, the business might not stack up even with a major price reduction. This can be a difficult issue for all parties: you may not want to settle unless a certain percentage of units in the complex are sold to investors who have signed a POA Form 6 with you.

In a holiday complex, consider if you require a minimum number of units to be fully furnished.

Also be aware that unless a majority of units are to be rented, the accommodation module should not be adopted and if it is could be challenged in the future, reducing the term of the management rights agreements to 10 years.

Tip number 10 Clawbacks are probably the biggest single bone of contention when buying offthe-plan management rights.

Some developers simply refuse to consider clawbacks or

minimum numbers to complete.

If that is a commercial risk that you are prepared to take, then in some ways that can be a relief. It can certainly save a lot of negotiating, legal costs and delays!

But most managers would require a clawback. Consider the example in Tip number seven. If you are expecting 50 units in the letting pool and there are only 45, the value of that discrepancy is 5 x $27,000, that is, $135,000.

Ideally, other features of clawback clauses include: not paying for units retained by the developer or its associates, only paying on receipt of a signed POA Form 6 letting appointment from an owner who has completed the unit purchase, only paying for completed, furnished units (if applicable) and a credit for appointments lost (other than due to your poor performance) during the clawback period.

All of these items are negotiable.

The Management Rights Lawyers

y Buying and selling y Off-the-plan acquisitions y Legal due diligence y Agreements and variations y Remuneration reviews y Options and top-ups y Dispute resolution

Brisbane L 18, 167 Eagle Street Brisbane Qld 4000 07 3007 3777

Gold Coast L 2, 235 Varsity Parade Varsity Lakes Qld 4227 07 5562 2959

www.mahoneys.com.au

RESORT NEWS - APRIL 2026