Podcast: Another blow to ‘no-pets’ buildings

There’s another very mixed bag this week but it’s mostly good news in these trying times.

Up in Queensland, the tribunal there is chipping away at restrictive pet by-laws in a building called Trafalgar Towers where one resident was forced to carry her blind dog up 12 storeys to their home.

The Body Corporate has now been told in no uncertain terms that the by-law is invalid and to get it off their books.

As this story details, this is the same building that not only tried to ban other people’s pets when their caretaker had his own dog in the building, but then tried to force owners to transport their pets across common property in cages.

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Later in the podcast, we also discuss whether you would ever buy an apartment in Queensland, as part of a much broader chat about a report on rentvesting.

As described in detail in this story, the co-authors of a forthcoming book called The Female Investor, have set out to show women how they can secure their financial futures through the ownership of property.

And as a side issue, they have identified areas where property prices are relatively low but demand for rental accommodation is high.

That makes these areas strong candidates for potential rent-vesting, where you rent a home in an area where you want to live, but invest in an area where you can afford to buy, let the property and take advantage of all the taxation and other benefits that follow.

Finally, we discuss how to find a good strata manager – and avoid a bad one.  That’s all in this week’s Flat Chat Wrap.

If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons on this page.

TRANSCRIPT IN FULL

Jimmy  00:00

It’s all happening up in Queensland.

Sue  00:01

Yes?

Jimmy  00:03

It’s kind of like they’ve woken up, up there, to stuff that’s happening in strata and they’ve started going “hang on; we can’t keep doing this stuff.” The latest thing is a place called Trafalgar Towers, which has been taken by owners for the second time, I think, in  five years, in issues over pets.

Sue  00:24

Oh yes, this is the building that wouldn’t allow pets to go into the lift, isn’t it?

Jimmy  00:28

Yes, so we’ll talk about that in a minute. We’re going to talk about rent-vestmint…

Sue  00:33

Rentvesting.

Jimmy  00:35

Rentvesting, and that’s where you rent a place you want to live in; buy the place that you can afford and rent that out to other people.

Sue  00:43

That’s right.

Jimmy  00:44

So it’s one way of getting into the property market and, we’ve had a letter asking how do you choose a good strata manager, so we’ll be talking about that, too. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  01:00

And I’m Sue Williams and I write about property for Domain and the Sydney Morning Herald and the AFR.

Jimmy  01:05

And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

Trafalgar Towers in Maroochydore has been in the news, again. They have a bylaw about pets and the bylaw says that you cannot take your pets in the lift.

Sue  01:34

How many lifts have they got?

Jimmy  01:37

I don’t know; doesn’t matter.

Sue  01:39

They would have more than one lift; they’ll always have two lifts, at least.

Jimmy  01:43

So, a couple who owned an apartment there (and I think it was on something like the 15th floor); they were told… When they bought the place, they had two dogs, and they were told there are no pets allowed here and about four or five years ago, somebody challenged this, because the caretaker’s dog was allowed in the building.

Sue  02:07

One rule for him and another for everybody else!

Jimmy  02:10

The whole caretaker thing in Queensland is just a joke anyway. So, they managed to persuade them to allow pets, but they created this pet bylaw that said (back then), things like, the pets had to be carried in a contained cage, at any point that they were on common property, and had to be taken down the fire stairs and brought in and out by the side-entrance. The Body Corporate Commission Tribunal back then, kicked out those clauses, so they didn’t have to carry them in a cage, but they weren’t allowed in the lift.

Sue  02:18

That’s crazy, carrying them in a cage. What do you do with a cage, when you get the dog outside? You have to carry it around for a walk as well, or something?

Jimmy  02:55

They got rid of that, because it was unreasonable. Then, this other couple came in, and they had two dogs, and they bought it as a kind of holiday home for themselves, and a place that they would rent out to other people (which is a very common thing in Queensland, especially in that area).

Sue  03:13

It’s encouraged a lot in Queensland, as well, because it’s kind of the holiday State, in some ways.

Jimmy  03:18

It’s how their strata is based, basically.

Sue  03:21

And I know these people (I know you said the 15th floor; sorry to correct you, but it’s on the 12th floor)… They were actually walking up 12 flights of stairs, to their apartment each time and how could you possibly rent it out and say “okay, well, you can have a lovely holiday here, but we just need to warn you, that you will have a big walk, if you have a pet with you.”

Jimmy  03:41

It meant (significantly for them), that they couldn’t really go there themselves, to stay in the place that they owned. One of the dogs died, so they’re left with this miniature poodle, I think, which was totally blind and they’re expected to carry this dog, up and down…

Sue  04:01

12 flights of stairs.

Jimmy  04:03

So finally, they went to the Commission and…

Sue  04:07

Airtasker.

Jimmy  04:09

And last year, they got an interim order put in, preventing them from being fined, or whatever and just the other week, the Commission has said “yeah, you cannot force these people to go in the lift.” But it’s so funny; you see the arguments that come out. It really brings out… I don’t know, it’s almost like the comical side of strata. You remember last week we were talking about the lady; the smoker?  She was saying “I can do what I want and bylaws aren’t laws, and I got all this smell from perfume and marijuana, coming into my apartment.”

Sue  04:44

I remember it all-too-well, Jimmy!

Jimmy  04:45

So, some of the reasons that were given for having this ban on dogs in the lift were other people who were dangerously allergic to pet hair and there are people who are terrified of dogs and you know, personally, I find blind, miniature poodles, particularly scary! There’s a huge number of apartments in this building on the rental roll, so people who might want to rent the apartments, might object to having pets in the lift, so that restricted the rights of other owners, to rent their apartments.

Sue  05:24

Good grief!

Jimmy  05:25

And when you’re saying “we’re going to put a preference on the people who might rent a place for a holiday, over people who actually own the place and want to live here,” I think things have got seriously out-of-kilter. So that part of their bylaw has been booted into the surf.

Sue  05:44

Excellent! Because you know, obviously, some people do have allergies, and some people are scared of dogs and it might even be little dogs, that they’re scared of, but then you’ve got two lifts… Just ban dogs in one lift…

Jimmy  05:58

Yep, you can only use lift number two.

Sue  05:59

Yes, and no animal owner would care about that particularly.

Jimmy  06:04

If people are particularly nervous or sensitive, then they should only ever use the other lift.

Sue  06:14

Yes, absolutely. It’s a perfectly sensible solution, but to try and ban them completely… Some of these people have never lived in an apartment building with animals and there are so many advantages! We’ve lived in an apartment building with animals for a long time and there’s such a sense of community; you get to know other people so much better. You tend to start knowing people by their dogs, really and they’ve always got something to chat about. It’s just a lovely, friendly, atmosphere. People are always asking how dogs are… We’ve had a couple of dogs who ended up in wheelchairs, when they were injured. Everybody was really concerned about those and it kind of brings out the best of people, really.

Jimmy  06:59

I think living in strata sometimes brings out the worst in people. Somebody sent me a link to the Betoota Advocate, which is a satirical newspaper, and is quite funny, usually. They had an article that said there was scientific proof that people who are on strata committees, are the worst and most awful people in the world. I mean, it was totally bogus, you know… It said there’s this survey that had been done and it had proved 100% conclusively, that people on strata committees were just awful human beings, and they just want to interfere with other people and they’ve got no compassion or consideration for other people, and they’re just bullies and they’re stupid and all these things. You read it and you think “okay, you know, it’s kind of funny,” but here’s somebody who’s committee has said “no, you cannot do such and such in your apartment, or in your building… Your music’s too loud, or your dog’s too big…”

Sue  08:05

Or “your cat meows too loudly.”

Jimmy  08:07

Or, you know, like the woman who’s been writing to the forum, whose neighbor complained about her cat litter box in her bathroom; she could hear the cat scratching the cat litter.

Sue  08:19

Really?!

Jimmy  08:20

Yes and she also complained that she could hear her in the shower of a morning, in the bathroom, so she put down a rubber mat, to try and cut down the noise from the water and then she complained about her removing the rubber mat; the sound of the rubber mat…You know, those ‘popping’ sounds, as the suckers come up? You think, okay, the sound insulation in this apartment block is not great, but there are people (and this same person had complained about people having the television on too loud and revving their cars when they were leaving the garage)… I mean, I suggested that it’s a condition (especially among older people), where their hearing… rather than going deaf, it becomes more sensitive. Remember, we had a friend who was like that; she really could just literally hear a pin drop…

Sue  09:19

I bet she made her neighbour’s life a misery, didn’t she?

Jimmy  09:22

Well, the neighbour above her, she complained about the slightest noise, but she complained about it by hammering on the adjoining wall with her next door neighbor’s with a hammer. She lay in bed and bashed the wall with a mallet. There are people in strata, who will pretty much complain about anything, so the Betoota Advocate (somebody who writes for them), has been given the opportunity to vent about strata committee members, in general. I’ll put a link to it on the website and people can read it for themselves, because it is quite funny. So, the pet owners of Trafalgar Towers in Maroochydore can breathe easily again. They don’t have to carry their pets up 12 stories. I think once you get past 8 stories, it doesn’t really matter how many…

Sue  10:18

You don’t care anymore.

Jimmy  10:19

You don’t care; you start losing the will to live. When we come back, we’re going to talk about rentvesting and whether or not it’s feasible. That’s after this.

[MUSIC]

Sue  10:37

So rentvesting isn’t really new. I mean, the idea has been around for a long time, but I think…

Jimmy  10:42

 I think it didn’t have a name before.

Sue  10:44

Yes, it did; I’ve written about rentvesting for the last four years.

Jimmy  10:48

But, I think even before that, it existed.

Sue  10:50

 Probably!

Jimmy  10:52

Before you gave it a name.

Sue  10:54

No, I didn’t give it a name; other people did.

Jimmy  10:56

Okay, carry on.

Sue  10:57

I  think it’s actually got much more currency at the moment, because prices have gone up so hugely, and we’re all looking towards (later on this year), for a probable interest rate increase, as well. You know, even the RBA has signaled that it may well happen later this year, which is kind of triggering alarm in a lot of people. I think suddenly, rentvesting is back in the spotlight, because a lot of people want to buy a home; they want to buy their first home, but they’re paying a lot of rent and the areas in which they live, they just can’t afford to buy a place. Therefore, they’re looking towards cheaper areas, where they could afford somewhere, conceivably, but then renting in the nice areas where they want to live and that seems like an excellent compromise.

Jimmy  11:40

So basically, you’ve got people who have got, maybe, a nice job; a nice lifestyle, but they don’t have the disposable income to be able to save up the huge amount of money that would allow them to put down a deposit.

Sue  11:53

Yes, that’s right, because if you have to save up 20%, and the median price in Sydney now, is over a million dollars, that’s $200,000; that’s a lot of money!

Jimmy  12:03

And our nephew was just saying last night, that every time he thinks he’s almost got to the point where he can save enough to get a deposit, the deposit amount goes up. It’s always just out of reach, so you’ve got people with a nice job, a nice lifestyle, and they want to live in a nice area. They want to kind of live with their tribe, basically, but they can’t afford to buy there. So, they find an area where they can afford to buy and where there is a reasonable chance that they’ll be able to rent the property out that they buy, to somebody who does want to live in that area. Is it feasible?

Sue  12:41

Well, it seems that it is. I mean, we’ve had lots of figures over the years, but a new report has just come out from the Female Investor, which is a buyer’s agency and the director of Bricks and Mortar Media. She’s also a board member of the Property Investment Professionals of Australia.

Jimmy  13:02

Right, so she knows her onions.

Sue  13:04

There’s lots of investment groups; some of them are active, and some of them aren’t. She’s done a study into how much rents are, in certain locations and whether they will be affordable. I mean, like, say, Broken Hill; it would be very affordable, but you wouldn’t probably get very much capital growth, really. She’s looked at areas where it’s affordable; where there’s a very low vacancy rate… ie, there’s lots of people around who would want to rent your property, and where you’re likely to get good capital growth in the future and she’s come up with an idea for each State and Territory.

Jimmy  13:42

Now, we’re going to put this on the website (pretty much, just cut and paste), but what are the areas? What are the areas that she recommends?

Sue  13:54

Well, in Melbourne, she’s talking about Casey City Council and the suburb of Cranborne there; the median house price is $657,000, which sounds very cheap, when you’re living in Sydney and the rental vacancy rate is 1%. There’s a lot of local industries; very diverse, because you never want to invest in a place where there’s only one major industry really, because if anything unforeseen happens…There might be a thriving tourism industry, and then suddenly, you get a pandemic and the whole industry is wiped out.

Jimmy  14:29

Or, a big car building plant.

Sue  14:31

Yes and suddenly, we’re all buying electric cars, and that kind of disappears.

Jimmy  14:34

We should be building our own. You should reopen those factories, to build the Australian electric car.

Sue  14:40

That would be nice, wouldn’t it?

Jimmy  14:42

It would be like that car in The Simpsons, where Homer designed the car for his brother, and it had giant cupholders for drinks and snacks and things.

Sue  14:55

Like the Flintstones car; do you remember the car they had?

Jimmy  14:58

See, that’s sustainable power there.

Sue  15:04

The areas which have gone up in price the most over the last year, have all been either coastal lifestyle areas; the kind of areas that we want to live in (and now, when we can work from home, we can actually live there, most of the time), or, the mining areas…A place like Port Hedland in WA…

Jimmy  15:22

That’s kind of boom-and-bust as well, isn’t it?

Sue  15:25

Absolutely right. It’s got one industry and if the iron ore price falls, or copper price falls…

Jimmy  15:34

Is there a rule of thumb; like, if you spend $650,000 on your average house, or apartment in that area, what kind of rent can you expect?

Sue  15:51

You’d be looking at about, probably very similar to the price you’re paying.

Jimmy  15:55

So just knock off the three zeros, and that’s your weekly rent?

Sue  15:59

Yes, $650,000, something like that.

Jimmy  16:02

 That’s not going to cover your mortgage, though.

Sue  16:04

No, but then you can negatively gear it.

Jimmy  16:06

So you can pare it back and pare it back, so that, okay, you’re not getting it for free, but you’re in the property market…The value is going up. You’re getting your negative gearing; you’re getting your depreciation…

Sue  16:23

Depreciation, it’s a new place.

Jimmy  16:24

Yes and basically, it’s feasible. You might have to cut down on your coffee and donuts, a little bit.

Sue  16:33

And avocado.

Jimmy  16:35

So where else was there that they recommend?

Sue  16:37

In Sydney, they’re looking at Penrith City Council. Kingswood, which is a suburb in Penrith (Western Sydney); the median house price is $790,000.

Jimmy  16:48

That’s pretty good.

Sue  16:50

And the rental vacancy rate is again, 1% and 1% is really low.

Jimmy  16:56

Yes, I mean, that’s like people queuing out the door, to see your property.

Sue  17:01

It is, yes. That means that demand really does eclipse supply. You know, the 1% of properties that are vacant, they might just not be very good properties. There’s a huge demand for good rentable houses and apartments

Jimmy  17:16

Where else is there, while we’re on this roll, of sending people out to the suburbs?

Sue  17:21

Well, we could look at Perth, but maybe, we shouldn’t look at Perth, because no one can go there, really. Then you’ve got Adelaide. Adelaide has been the quiet achiever of the property market over the last year, because it’s a quiet kind of, almost a country town, and a lot of people are going there…

Jimmy  17:38

It’s a very nice city.

Sue  17:39

Yes and it’s great lifestyle. There’s not much traffic; you can actually walk to work from lots of places, as well. A friend of ours went; she lived in Darlinghurst and she went over to Adelaide. We’ve never seen her again, have we? She just loved it. We kind of thought she’d be back within a year.

Jimmy  17:57

It is also the murder capital of Australia.

Sue  17:59

I think it used to be; I’m not sure it is anymore.

Jimmy  18:02

No, probably not.

Sue  18:03

But there you’ve got the city of Onkaparinga and the suburb of Morphett Vale. I mean, they’re great names. The median house price there is $430,000.

Jimmy  18:13

Wow!

Sue  18:14

And the rental vacancy rate is 0.1%.

Jimmy  18:18

Wow!

Sue  18:19

So even if you’ve bought garden shed, you’d probably be able to rent it out.

Jimmy  18:22

I think I will.

Sue  18:23

And you know, Adelaide, has always had really stagnant house prices; not had much capital growth, but over the last couple of years, because of the pandemic and people trying to escape it, prices have really increased significantly. Capital gain will probably continue to be strong and, you know, it’s a nice seaside location; good rental yields…

Jimmy  18:51

Fabulous restaurants.

Sue  18:53

Yes, absolutely.

Jimmy  18:54

And that fabulous market there.

Sue  18:57

Yes and I think that’s just being redeveloped now, so it’s going to be even bigger and better.

Jimmy  19:02

I think I read somewhere that it’s going to be a bit like the Time Out market in Lisbon. Or, part of it is, so there’d be a lot of food stall-type places. I think if I wasn’t living in Sydney, I would probably seriously consider, Adelaide.

Sue  19:19

Really?

Jimmy  19:20

Yes.

Sue  19:20

 You might be moving there on your own!

Jimmy  19:25

You’re not overselling it then!

Sue  19:28

If I was not living in Sydney, I think maybe, I’d think about Brisbane or the Gold Coast.

Jimmy  19:33

 Really?!

Sue  19:34

Or Noosa, although, I couldn’t really afford Noosa. It’s really, really expensive.

Jimmy  19:37

You’d have to leave the cat’s back here, because there’s something like a 90% chance that you wouldn’t be allowed pets.

Sue  19:45

In the lift! I’d have to get a ground floor apartment, with cats.

Jimmy  19:50

Is there anywhere else that we should be looking at?

Sue  19:52

Well actually, when you look at Brisbane, they’re suggesting Moreton Bay Regional Council. You look at Caboolture; the median house price there is $445,000.

Jimmy  20:03

What?!

Sue  20:03

 Yes, it’s great. As soon as you leave Sydney, suddenly prices plummet, unless you’re going to Byron Bay, where prices are more expensive than Sydney. The rental vacancy rate there is .07%.

Sue  20:16

And they’ve got loads of infrastructure projects around there. And of course, the whole of Brisbane is hopefully going to take off after 2032, when it gets the Olympic Games. They’ve got a lot of infrastructure going in there; a lot of investment. They’re expecting a lot more people going there, because lots of people have been migrating to Brisbane from Sydney, and particularly, Melbourne, because people in Melbourne, have been sick of their long lockdowns… They just want to escape, just in case things get worse, if another variant (a worst variant), comes, they can afford a bigger house; a nicer environment, perhaps.

Jimmy  20:16

Wow!

Jimmy  20:56

You wouldn’t buy an apartment there though, would you?

Sue  21:00

I would, but I’d be really careful about the strata; I’d be very careful about the bylaws. I’d be really careful…

Jimmy  21:06

About the caretaker management deal.

Sue  21:08

Yes, those kinds of things. I mean, a friend of mine is in property and she’s just bought a couple of places in Brisbane and her partner is a developer, as well, so they’re quite worldly and quite knowledgeable. They’re just very, very careful. They check the strata agreements; you know, the proportion of renters and owners. I think you just have to be a bit more diligent, when you invest outside your own State, which has different strata rules, really.

Jimmy  21:37

But you know, it just worries me… I know that the government there brought in a second tier of strata title, which was residential. As we said before, Queensland strata is based on holiday rentals and then, they found out that there are these strange people who just want to live in apartments, so they brought in a second kind of strata, which basically said, you cannot do holiday rentals, in this building, so it’s only for permanent residents. But then, along came Airbnb and Airbnb said “yeah, but that doesn’t apply to us.” So, you’re getting the situation in places like Gold Coast City, where the owners in these buildings are saying “hey, our planning application; our planning approval is for no holiday rentals and we’ve got these Airbnb people in here. Could you please come and do something about it, because you’re the the authority” and the Gold Coast City Council’s going “but we kind of like having tourists, so…”

Sue  22:36

But, can they pass bylaws in the same way they can in New South Wales?

Jimmy  22:40

I don’t know if it’s been tried. I mean, we only hear dribs and drabs, when things get out of hand up there (like with dogs having to be carried up 12 flights of stairs), but maybe they could bring in bylaws to prevent short-term letting, or maybe they would be told “no, this is something that only the council can do.”

Sue  23:01

But then, you can try and get elected onto the council and try and change the policy?

Jimmy  23:05

That’s a fairly long-term strategy.

Sue  23:08

Yes, or you can really lobby councillors.

Jimmy  23:10

I know that the Unit Owners Association of Queensland fights this (I don’t know how they keep going, because they just keep getting ignored by the council’s and by the Body Corporate Commissioner), and everybody can see that what’s going on is just morally wrong, but there’s money involved and nobody wants to upset the applecart.

Sue  23:35

I’ve known the unit group for, probably, about 15 years now and from the beginning, they’ve actually effected quite a lot of change, so even though the situation is still a bit grim there, it’s a lot less grim than it was. The fact that they’ve initiated change; maybe, the pace of change will continue. I think there’s always hope and the more people go up there from the southern states and add to the pressure on the Gold Coast Council, maybe, things might start to change?

Jimmy  24:06

We had friends; a couple, who were seriously looking at buying a property up in Noosa. I think they would have it for four weekends a year; or four fortnights a year and then rent it out as holiday rental the rest of the time. Now, he’s an accountant; a very high -powered accountant and when he looked at the costs involved…The management fees, the caretaker fees, the rental fees… He couldn’t get the figures into the black, at all and they just gave up and bought somewhere in New South Wales. So you know, it’s a tricky place and I know I said I would never buy an apartment there (and I probably wouldn’t), but would I recommend other people to buy apartment’s there? Well, if you know what you’re doing and you’re very careful, and you’ve checked out everything that could possibly be wrong with it, then yeah, because there’s a lot of lifestyle issues there that are quite attractive.

Sue  25:05

Yes, especially these days. We’re all kind of valuing lifestyle a lot more, than we perhaps were, this time two years ago.

Jimmy  25:14

But you know, one of the problems there has been that strata managers have been (some of them), in cahoots with the caretaker managers, especially when it comes to going to a Body Corporate and saying “your management agreement is about to run out and basically, we want you to extend that contract by another 10 years,” with the clear implication that if you don’t do what we want, your lives are going to be a lot less pleasant than they are now. These are the kinds of situations where you would hope that the strata managers would step in and say “hang on; you can do that.” But, the reports that I hear, strata managers in Queensland turn a blind eye to all that stuff, because they can make money out of those transfers of contracts, as well.

Sue  26:05

Sure.

Jimmy  26:06

We are going to talk about how to find a good strata manager.

[MUSIC]

Jimmy

I had a letter today (an email, not a letter), from somebody saying that their building; the strata management contract is coming to an end…It’s a good opportunity for them to consider whether they’re getting good value from their strata manager and if not, what should they be looking for in a strata manager? So Sue; bullet points!

Sue  26:38

Thanks, Jimmy. Always, you would get three quotes anyway, so you’d interview three strata managers, and look at the strata management companies. The difficulty (always), with comparing strata managers, is being able to compare oranges with oranges and apples with apples, because often, they have different structures, and they will charge for different things. Some companies will charge for correspondence…

Jimmy  27:06

Every detail; every phone call.

Sue  27:07

That’s right and they can really mount up.

Jimmy  27:13

They sure can.

Sue  27:14

Other strata companies will just charge you a flat rate, so there’s no substitute for doing your homework really, and working out who is charging for what. I would draw a graph. and I would kind of get each strata company to fill it in for me. What do you charge for? What do you do? How much is this? What percentage is this?

Jimmy  27:33

But, I think you also have to look at how your strata scheme functions. If you are in a strata building where every other day, somebody is phoning up about a complaint about something and there’s a lot of disputes and strife, you want the all-encompassing fee. If you’re a building that’s really well organized, and you’ve got a good committee and a good secretary, and it pretty much looks after itself, then you would go for a lower fee, but with the occasional Schedule b. charges

Sue  28:07

Yes, exactly. You would also depend on your size; the complexity of a strata scheme may need a bigger strata community company. If it’s a very simple three-up, three -down building it may need…

Jimmy  28:21

Which a lot of strata managers won’t touch, because every dispute in that building is personal.

Sue  28:29

But it’s interesting, because some companies specialize in small buildings, and some companies specialize in big buildings, so it’s really important you don’t get one of the strata companies which look after 1000-lots, to look after your little 20-lot place.

Jimmy  28:45

I’m a great believer in the small local strata management company, for the small local strata scheme. That can work, although we used to have a flat where (remember at the AGM; it was held in the strata manager’s home and he started every meeting by telling us that he had been trained in self-defense by Mossad, just to create the right atmosphere)?!

Sue  29:12

He was a scary, scary man, wasn’t he?

Jimmy  29:15

But highly-respected in the industry, for some reason.I think you need to ask, because often, you’ll get the three quotes and they’ll send along one of their sales managers, for want of a better word. You want to meet the person who’s going to be managing your scheme.

Sue  29:31

That’s a really good point!

Jimmy  29:32

You don’t want to meet the boss; the boss is a very successful and presentable person, usually… That’s how they  became the boss, but if they then send along some…

Sue  29:43

15-year-old, wet-behind-the-ears novice…

Jimmy  29:47

To cut their teeth on your strata scheme; you don’t want that.

Sue  29:51

No. Similarly, I’d just disagree with you about one thing, because in one building, we actually had the boss as our strata manager and he was the opposite; he was a very unimpressive person. I remember we said “we want to be able to email you and stuff,” and he said “no, no, not emails; you have to write, or you have to phone. This is kind of a new-fangled technology and we want to have nothing to do with it.” He was completely chaotic in the way he ran his business. He was just very old-fashioned, because he’d been doing it for a long, long time and when we met one of his young juniors, he was much more approachable and he was much more organized and efficient. You kind of never know. But, you’re quite right; you want to meet the actual person who’s going to be managing your scheme.

Jimmy  30:34

Yes and the other thing is, when you’ve met that person, you want to say “how many other schemes are you looking after? How many apartments are in them?”

Sue  30:45

Yes, if he says “I’ve got 140 other schemes and I’m looking after 9000 apartments!”

Jimmy  30:50

You say “well, you’re not going to have 141!” I think basically common sense applies, generally in all this. Think about the pressures that they’re going to be under and how much time they can devote to you and the other thing is the cost.  I think the current average cost is about $280 per lot, per year; it may be a bit less than that and it may be a bit more than that. You need to ask why. Why is this so much cheaper? If the answer is “because we have 1000’s of apartments, and we’re able to advertise…”

Sue  31:27

Making it a false economy.

Jimmy  31:29

Totally. The other one, where it’s more expensive, could actually save you money in the long run, because you’re getting personal attention-to-detail.

Sue  31:40

Yes and they might put better structures in place.

Jimmy  31:43

Here in New South Wales, they have just brought in their professional standards, and their Code of Conduct… this year, they and Fair Trading are going to bring out a new strata management contract, which is going to take out a lot of the stuff that people objected to, because at the moment, the strata management contract in New South Wales (and I suspect, everywhere else), means that the strata manager is not responsible for anything that ever goes wrong, especially if they cause it. So, they’re fixing that.

Sue  32:17

And how about commission on things like insurance?

Jimmy  32:20

Well, I mean, this email came from somebody in Victoria, and both here and in Victoria, the strata manager has to declare any commissions. You can’t stop them from taking commission and if you say “well, we’ll go and get the insurance ourselves and take the commission off the insurance premium,” the insurers won’t allow that.

Sue  32:42

I mean commission; maybe that’s a good way for a strata manager to supplement their income to mean that they’re not charging you quite so much. It can work, but it’s good for the system to be transparent and for you to know.

Jimmy  32:56

Yes, some strata managers take the commission and then pay it back to the Owners Corporation. They agree that the commission shouldn’t necessarily be there, because they see it as part of their job, to provide that information, so they don’t see how it’s correct for them to take commission for doing something that is part of the job that they’re being paid for. Others don’t, it has to be said, and there are others; some of these small firms that we were talking about, they depend on that commission. Because in terms of the ratio of work that they are doing on small unit blocks, it’s hard for them to turn a profit, without the commission. So be flexible, I suppose.

Sue  33:39

And often, they might have a really good relationship with a particular insurer, which really helps you out in the long run. I remember in our building; some of the members of the executive committee were being sued in an issue (including me), and there was discussion about whether we would be covered by insurance and technically, we weren’t going to be covered by insurance, but our strata manager had a great relationship with an insurance company and persuaded them to insure us and so they agreed, and then we ended up winning the case, anyway.

Jimmy  34:10

So it didn’t cost them anything.

Sue  34:12

Yep, that’s right.

Jimmy  34:13

The one thing you’ve got to be careful with commission’s is, you might be able to get a lower premium on your insurance, if you agree to an excess; that you’re not going to claim insurance for anything, say under $500, whatever… That could affect the strata manager’s commission, so you need to be sure that you’re getting a variety of quotes and styles of insurance, through your strata manager, but that’s a minor point. I think you’re looking for somebody who’s going to be there. You’re going to know who they are; they’re not going to be distracted by all their other buildings. We’ve gone through a period where big companies were hoovering up small strata management firms and then the level of service was dropping off, for the individual buildings, so I feel that we’ve gone past that, now.

Sue  35:03

We’re getting strata managers who are a lot more responsive.

Jimmy  35:05

Yes and they’re able to hook into infrastructure in a bigger company, that allows them to run websites for the building and stuff like that, because that stuff’s already there…They’re not having to start from scratch, with every little company. It’s a case of find the right strata manager for your scheme and then you need to have quite clear performance levels, so that you can say “well, you’re not doing the job here. You need to go.”

Sue  35:30

Yes, absolutely.

Jimmy  35:32

Alright. On that note, Sue Williams, thank you very much, for coming in and chatting to us again.

Sue  35:38

Great, thank you, for having me.

Jimmy  35:39

And thank you all for listening. We’ll talk to you all again soon.

[MUSIC]

Jimmy

Thanks for listening to the Flat Chat podcast. You’ll find links to the stories and other references on our website, flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcast, Google podcast, Spotify, Stitcher, or your favorite pod-catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.