Is it Really the Time to Sell?

I am sure that I am not alone in saying ‘good riddance’ to the year 2011.

What a year it was; it seemed that every time I looked at a newspaper there were reports of another natural disaster or financial market jitters. And while they happened a year ago now, the Queensland floods and Cyclone Yasi remain fresh in the memory.

Some longer-term operators looking to sell their complexes in 2011 may have put those plans on hold because of the series of events that took place. If you are one of those, I am sure you are crossing the days off the calendar until you can have your net profit for sale prepared without figures from January and February 2011 dragging the numbers down.

If this is your intention, are you prepared for a sale rather than just being so worn out that you just want out?

Planning to sell your complex is a project that should start almost before you have signed the contract to purchase it. While this may seem like odd timing, at the end of the day, a management rights complex is an investment and, as such, saleability is one of the most important factors to consider. If the complex you purchase is well located, with a good yield, a number of interested parties and you manage it well, hopefully there will be similar interest when you list for sale. However, if you buy a poor yielding building with a small letting pool or other detracting features that has been on the market for some time, it is likely that you will experience the same conditions upon sale.

If selling in 2012 is part of a long term plan, with retirement or a ‘tree change’ looming, you should be well prepared by now.

Is your house in order? Consider the following:

• What state are your agreements in? A regular review and continued maintenance of your caretaking and letting agreements is a good idea. Think about using the solicitor that acted for you on the purchase, as they have already seen the agreements and won’t be starting from scratch.

A year or two before your planned sale, take care of any issues with your agreements at your annual general meeting. This can prevent a mad scramble to hold an extraordinary general meeting prior to the sale settlement to rectify a flaw in the agreements that may have been picked up by the buyer’s solicitor.

• Review the letting appointments. For operators of permanent complexes check the letting appointments ideally each time a tenant exits, or at least annually. In a holiday or short stay complex, annual reviews are a good idea as well, with particular attention being paid to the charges schedule to ensure it is current and accepted by the lot owner. If this is done as a routine matter it should reduce any headaches come sale time.

• An operating manual for your complex is something that is often recommended by contributors to Resort News. During your tenure the manual should ensure consistent service to tenants and guests act as a reference when handling staff and suppliers and will be greatly appreciated by relief managers when you take a well-earned holiday. Having a clearly laid out operating manual may also be looked on favourably by intending purchasers, as it will provide a roadmap for running the complex rather than them having to work it out themselves.

• Do you understand the local market? Specialist agents are a valuable resource and have usually owned and operated management rights themselves. They should be able to inform you of what values are doing and what types of complexes are in demand. Sales agents may also offer valuable advice on what actions you should take to improve the site’s saleability.

• One of the most important considerations when looking to sell is your financial position. So much of your money is probably tied up in the business and unit. If your next step is retirement, you are probably counting on the sale proceeds to not only clear your debt but also to buy a home and to serve as the majority of your retirement nest egg. You should be consulting with your accountant on the tax implications of the sale and your financial advisor for the management of the net sale proceeds well before settlement takes place.

So, back to the original question: “Is it really the time to sell?”

The only one who can really answer that is you! But for a successful sale and a smooth transition to your next venture, you need to be well prepared and well advised. If 2012 is your year to sell, I wish you all the best with buyers lining up to offer you the asking price and more.

Paul Grant

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