377. Why you might want to self-manage your strata, and how to do it successfully
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David Glover has been at the helm of his self-managed strata building for many years. In this conversation, David shares how the decision to self-manage came about (the ‘strata manager from hell’ played a role) and how his community remunerates him for his services. He generously shares his top tips for those thinking of self-management, including the specific software his building uses, and so much more. This episode is a must-listen for any community thinking of moving away from the professional strata management model, AND any strata manager wanting to understand why some owners are voting with their feet.
This has been an excellent podcast. I can fully endorse everything that David had to say. For a small to medium size building (say up to 30 or so units), self-management of the kind that David describes can be a realistic option so long as you have one or two people who are prepared to do the necessary work.
Our apartment building in Brisbane’s Bayside has 26 lots and like David’s building, has few extra amenities apart from a lift to get us up from the basement car park to the 4th floor. We inherited one of the large body corporate management companies from our developer which turned out to be very unsatisfactory for all sorts of reasons, not dissimilar to David’s experience. So when the contract came up for renewal after 3 years, we changed body corporate managers to a smaller firm who has proven to be much more successful. We had also been given a caretaking contract for 25 years that went to a party related to the developer, a product of the iniquitous legislation we have in Queensland that permits this outrageous practice. Fortunately, we managed to get this contract extinguished after 3 years and in the process, have saved our owners at least $300,000 over the remaining 22 years of the contract.
We have adopted a hybrid model of self-management that may be more appropriate for many body corporate committees in a similar situation. Essentially, we self-manage everything to do with the building because, as David rightly points out, that’s exactly where most body corporate managers are not strong and where the Committee needs to exercise direct control. For a building of our size and complexity, this is not an impossible task and providing you seek appropriate professional advice when you need to (for example with building defects and your major maintenance contracts like lift and fire services), then you can save your owners thousands of dollars in maintenance costs while ensuring that the things that need looking after really do get done.
On the body corporate management front, we still have a body corporate manager to look after a few basic functions. They handle all the paperwork for the AGM and any extraordinary general meetings we may require, they pay the regular bills (but only after we give online approval to any payment), they send out the quarterly levy notices and receipt the levies when owners make their payments, and they keep the formal set of financial accounts for record keeping and triennial audit purposes. These are all bread and butter functions for even moderately competent body corporate managers that they should be able to handle efficiently. We run and minute all our own committee meetings, we handle pretty well all the communications with owners and we even keep a shadow set of accounts that enables us to exercise effective control over our expenditure and set our budgets.
We arrived at this division of labour after some years of experience where we worked out which body corporate management functions we wanted to control directly and which ones we were happy to delegate to the BCM. A year ago, we went to tender for a new BCM contract. However, in our tender we stipulated just those functions that we wanted the BCM to perform and explicitly excluded others like managing building insurance. We had 5 responses to our invitation to tender, but only 2 of them responding with a quote for just the functions we wanted them to carry out. The tender we chose has meant that our body corporate management fees have fallen by more than 60% on what we would have been paying a full-service BCM firm had we stayed with the original approach. Now, if we have an issue where we feel that we need some expert advice that our BCM can offer, we are happy to pay for that advice on a simple fee for service basis.
I think that eventually, we will get to the same position that David’s owner’s corporation has reached where they are happy to pay an honorarium to the key person to be the building manager, but that’s a conversation we are yet to have.
Nice to see SCA and OCN put in perspective.
Personally i would not recommend Flatchat – not a lot of solutions there.
A Cert 3 does not set one up to self-manage a SP, it gives some insight and is more introductory than a course that establishes competence. Even the Cert IV is well short of what is required to be competent.
Read the Act and Regs, read Ilkin’s books, read other books like Bugden and even Sherry, read a stack of case law, try to comply with the Act. Get hands on and prefer to over kill something than half bake it; provide it is still reasonably cost effective.
You do not need formal training, you just need to know what needs to be known and the above will get you there.
No qualification and it is a long road but once you have traveled it you will feel confident enough to self manage not only your own SP but voluntarily run just about any SP if you can get on their committee.
You will be better than most (State licensed) agents and close to having the skills of a strata lawyer and you will see NCAT is not fit for purpose and the State’s licencing system is a fail. You will be competent.
I like how ‘good’ some of the States licensed professionals get rated by David. “Manager from hell” and yet that manager still got licensed by the State. Where is the moral and ethical duty with some agents?
Without question there is a problem in strata management with the agent to lot ratio run by some of the bigger players. In some cases it seems unimaginable that an agent can provide proper management given the load demanded by their employer.
Agent are in business to make money first, looking after the client comes after that.
Cert IIIs and IVs are designed to set one up to be in the business. Save yourself the trouble of doing them and spend your time on more productive learning.
Self management is the way to go but it requires people who bring a certain objectivity to the role as well as a working knowledge of the Act and they are hard commodities to find with most strata owners.
There is a big learning curve to go from managed to self management but the curve flattens out a lot after 5 or so years.
Still, there are strata plans where the numbers mean objectivity and knowledge are worthless because it all comes back to ‘mob rule’.
Well done David.
Thanks David and Amanda for trying for us to have consumer protection in Strata Living.
I have the Strata Manager from Hell and it seems like there is nothing I can do but letting people know of my problems.
The Strata management it seems like it can do as it wishes and they are not liable, otherwise they would not do it.
Example: There are windows to be replaced in our strata of 4 Lots but we have problems with water ingress as a result of changing the copper gutter to an aluminium one without approval or knowledge from the Owners corporation
I paid my special levy due on 1 July 2023, on 28 July 2023 for the sum of $7500 The strata manager changed the quarterly levy by increasing it to $2, 112.50 or 61%. I did not pay the increase but the levy that we pay and not having value for money.
The owner who has been pushing for the windows paid his special levy on 4 August and it was charged $297.58 of interest.
If he paid on 4 August he was 5 days late so the interest should had been less than $20.
Also I do not believe that the Strata Manager have the contract to be our strata manager because the last one signed by a previous owner was for 1 year and that contract was late because it finished on November 2021 and the last contract was signed on 28 March 2022.
We need to make sure that our problems with the Strata Manager from Hell are hear by the government.
I really enjoyed the podcast and recognised some of the issues David spoke to.
Our building of 8 units is self-managed. I find as chairperson and treasurer that most of the work essentially gets done by myself or the secretary. The thought of being paid for your time has merit. It would have other members pay more attention to issues since it’s closer to home as they are now remunerating your input.
With regards to strata management there is a general misconception among members that strata managers are responsible for the operation of the building. Contracts inevitably include administration functions only. Any other tasks are delegated to the manager and charged through agreed-upon fees. Some of the larger body corporate/owners corporation management firms have contractors paying subscription fees. The higher the fee the more work for the contractor. It would present a breach of fiduciary duties if not for the fact that management firms are strictly speaking not in the business of building management. There are a number of unethical practices in strata management. Our body corporate insists that the insurance broker discloses commission fees at the time of renewal.
Thanks again Amanda and David for the pointers.
As a strata services provider, I have witnessed corruption and incompetence on both sides, which has an effect on my business
Biggest problem, is lack of communication
We get treated like dirt, and do not have any legal rights