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Strata Managers – The Property Problem Solvers - featured image
By Lauren Day

Strata Managers – The Property Problem Solvers

Imagine being threatened legally on an almost weekly basis, being called about ‘urgent’ matters every day, and having one person in every single unit block who just never leaves you alone.

Not many people could cope with the huge demands of being a body corporate, owners’ corporate, or a strata manager, but for 55-year-old Andrew Jakes, it’s a dream job, because he’s the one pulling the strings.

Well, almost.

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“It can be a bit hellish, you cop a lot of abuse,” he laughs. “There’s a common saying in the strata industry, ‘there’s one in every building.’ I’ve redefined that to say ‘there’s at least one in every building.”

But abuse or not, there’s no doubt the number of strata managers is on the rise, as more Australians are drawn towards inner-city living and willing to compromise on space for place.

Unit living is now largely accepted as a growing norm of society and over time, more apartments and high-rises are replacing houses on big blocks of land.

Although it’s a tough industry, it’s a growing one, and that’s precisely the reason Jakes ditched his IT job and joined the niche and needed market of strata managers.

He’s a problem solver, a peacemaker, an accountant, and the brains behind many decisions within blocks of units.

In fact, he knows a little bit about everything all over Sydney, from the types of trees around strata blocks and when they need cutting, to how many visitors are allowed in car parks and for how long.

He also knows that Jane in number three doesn’t get on with Mary in number six, and there’s a dog being kept in a block just down the road that’s making everyone upset.

Sound petty?

Well, it can be. And dealing with the anger that comes with strata issues isn’t pretty either.

On the other hand, if you love people, and fit all the pieces of a puzzle together, it could prove extremely rewarding.

Get to the top and there’s a good salary that can be achieved, along with a job for life.

What’s A Strata Manager?

Despite the heavy amount of accounting, negotiating, and organizing involved with strata management, there’s no legislative requirement for an owner’s corporation to engage a manager.

But for most unit blocks, the monthly in-fighting and account keeping can quickly become too much, so they opt to hire a manager who can keep an arm’s length and remain unemotional about problems.

“Some of the people we help are those who managed their own blocks before.

Owners are abusing them or they’re not thanked for what they’re doing.

We take the weight off them and show them how to do things,” Jakes says. Queensland body corporate record searcher Lisa Rutland says the job is a complex interchange between many groups of people and it can often lead to breakdowns in communication.

“Infighting isn’t uncommon, and neither is lack of any leadership issues,” she says.

“Poor management can lead to the inability to resolve other issues.”

A strata manager can usually exercise some or all of the powers of the committee and an executive member of the committee such as a treasurer or secretary.

This means they could responsible for organizing meetings, sending out levy notices, forwarding the minutes of meetings, and managing the body corporate funds.

But they don’t make decisions and they don’t vote as a part of a committee, Rutland says.

“The most important role of a body corporate manager is to consult and provide advice on the proposed actions of the committee,” she says. “There’s a substantial amount of legislation that applies to body corporates and the body corporate manager provides interpretation and clarification.”

Qualifications and Career Prospects

You don’t actually need any qualification whatsoever to be a strata manager and in that sense, the industry is completely unregulated, according to Hynes Legal direction Frank Higginson.

“You could literally hang up your shingle tomorrow, ‘strata manager,” he says.

“But you’d be nuts to get into one of these businesses without understanding it.

You’d need to go to work for someone first to understand the industry.

The intricacies of dealing with strata managers and people on a day-to-day basis aren’t an easy process.”

Higginson was recently told that making it harder to become a body corporate manager would mean more red tape, so it’s unlikely there will be more regulation any time soon.

Although there’s currently a legislative review going through Body Corporate and Community Management, the Queensland Government has a policy of ‘less red tape.’

“The strata managers basically have access to tens of millions of dollars in owners or body corp funds and there’s no probity around the funds and how they’re dealt with.”

New South Wales has stricter rules, where you do need to register, but the process is relatively easy.

Man Signing Contract

You can obtain a certificate of registration and a Certificate III from Tafe.

The other option is to get a strata license, which requires a Certificate IV.

It’s an online course which takes about four to six months.

“Once you have a certificate, you can work for someone who has a license,” Jakes says.

“You can’t own a business unless you have a license.”

Although strata management is tough, it can be financially rewarding if you’re successful.

Jakes says a six-figure income is easily obtainable and there are also rewarding commissions for strata managers within larger firms.

Employees might start at about $50,000, while a more experienced manager would earn about $70,000.

There are lots of side industries afterlife as a strata manager, including fire protection, window lock compliance, and strata searches.

“When you buy a unit you get strata to search and a lot of burnt-out strata managers move into this industry,” Jakes says.

“That way you don’t have to deal with clients. You only deal with conveyances.”

You might also get a job with a larger firm.

Some strata managers become developers or strata lawyers.

They might move into insurance or become brokers.

The options are endless, but one thing’s for sure - there’s every chance you can handle absolutely any kind of job after years of abuse as a strata manager.

Day-To-Day Life

Jakes describes day-to-day life as 25 percent legal, 25 percent accounting, and 50 percent social welfare.

“In that regard, it’s quite interesting,” he says.
“You’re very close to what’s happening in real life, politically and environmentally.”

Jakes says half of the day is usually spent ‘putting out fires,’ meaning responding to calls about leaking roofs, people locked out of their unit, or complaints about things like parking and trees.

The other half of the day is spent renewing insurance policies, handling compliance issues, attending meetings, and making sure all books and accounts are balanced.

“Dealing with the fires stops you from getting to the second part,” Jakes warns.

“Most of the compliance work I do is when the phones aren’t ringing. We turn the phones off after five (so we can do compliance work) and we have an after-hours emergency contact.

“I also come in at 7:30 am and try to write up the minutes of meetings then.

If you can separate putting out the fire from the compliance side of things, that seems to be a key for success.”

Being highly organized and efficient is the best way to do this, according to Jakes.

Thanks to his background in IT, he creates a website for each and every building he manages and asks people to ‘self serve.’

He publishes financial data on the websites and asks landlords to pay their levies and other fees through their own building’s website.

“Rather than a guy ringing up, asking ‘have my levies been paid?’ we say ‘just log on and have a look’.

If they need a copy of the strata insurance for their mortgage renewal, we can publish it on a portal, rather than send it through.”

This saves heaps of time and ultimately, money, as Jakes is able to work on other more important aspects of his business.

His IT background has helped him stay one step ahead of the pack.

For example, most strata committees attend meetings using Skype and allow people to phone in.

If you want to be successful in the industry, it’s also important to be across all of the different types of legislation and Acts.

“You need to have good knowledge of the Strata Schemes Management Act 1996 but also an understanding of the 25 parliament Acts,” he says.

The rules and laws can be about the smallest things, such as who is responsible if a fence falls down (for the record, it’s a 50/50 responsibility between neighbors).

There are also various codes of ethics and building Acts, including the annual fire safety checks.

Higginson adds these days, there’s lots of software available to help strata managers. In Queensland, the Body Corporate and Community Management Act 1997 tightened up the industry and many things must now be done within seven days or a specific period of time.

For example, lot or unit owners must be given 21 days’ notice for a body corporate meeting.

“If you get it wrong, you’re potentially invalidating the decisions made and the owners have a right to challenge,” Higginson says.

You’ll also need to make sure there’s always enough money in the sinking fund forecast for each and every building you deal with. Higginson says managers should always allow for a 10-year future forecast.

“This ensures the need for special levies is reduced,” he says. “Forecast reports should be updated every two years.”

Common Problems

Jakes says strata management is very much a high-volume, low-margin business, and dealing with the sheer volume of requests and demands is the key to success.

apartmentHe currently looks after 30 complexes with a total of more than 800 units.

He says it's important strata managers stick to working with committees, not tenants.

“A lot of tenants try to circumnavigate the rules, but unless it’s an emergency, we put them back to the owners or agents,” Jakes says.

“We’re not being paid to deal with tenants. We have enough to deal with.”

One of the biggest day-to-day dramas within individual blocks will be leaking pipes and roofs. Whenever it rains, there’s a downpour of complaints.

“It’s always a catalyst to pile more stuff on us,” Jakes says. “I get an email from an owner, ‘the roof is leaking, it causes mold. I now can’t let out my unit and it needs to be fixed immediately!’”

He recently received an email from a landlord, demanding a roof be fixed and that the problem had been occurring since 2012.

“I checked through the records. In 2012 we sent a plumber because the balcony was leaking. Back in 2012, it was a balcony issue. Now it’s a roof issue.

They were separate things, but this is a common misconception.”

Jakes calls this kind of problem the ‘bottleneck problem.’

It’s where an owner has a complaint and can’t rent out their unit until a wall or a roof is fixed.

The agent might never report it, and the previous tradie might not have fixed it properly in the first place.

The tenant might also have failed to report the problem until the water is literally pouring down the wall.

But everyone blames the strata manager.

“From the landlord’s point of view, it could be $400 a week in rent they’re missing, so for them, it’s an emergency. But for my other 799 units, I still have to look after them as well.”

Then, of course, there’s the landlord who goes over every single bit of expenditure with a microscope.

“Some people follow expenditure down to the last cent,” Jakes says.

“Others won’t accept that their problem isn’t a strata issue.”

For example, one landlord in the upmarket Sydney suburb of Woollahra had rising dampness in her property.

An independent lawyer confirmed the wall belonged to the landlord, not the owner's corporation because it didn’t adjoin to another unit.

“She was told this and still can’t accept it,” Jakes says.

“Every so often she’ll flare up and tell me to send someone else around. I have to keep telling her, ‘it’s your responsibility.’

People often won’t accept the reality of their situation.”

No wonder then, Higginson describes the role of a strata manager as “really difficult”.

“They have to run with the fox and hunt the hound,” he says.

“They have to know spending limits. They also have to be a bit of a gatekeeper.”budget

Some people within certain buildings will always be, shall we say, ‘heavily involved in the day-to-day actions of their own strata committee.

It might be the person who always requests petty cash to buy plants or the owner who times how long someone parks in the visitor’s car park.

“Sometimes the strata manager has a position where they know the committee is doing the wrong thing and they know they need advice. But they can’t say ‘you’re a bunch of idiots,’ because next time the appointment comes up, they’ll get fired.

“There’s always one in every building but the bigger the building, the more chances there are.”

The trick is to “cover your backside”, Higginson says. It’s all about making sure you can’t get sued.

“You might see clients and you know they shouldn’t be doing something, but they’ll do it anyway.
All you can do is write to them so when something goes wrong and they say ‘you should have told me you can tell them ‘I did. If you’re ever giving advice, cover it in writing.”

The Pros

A strata manager can have a job for life if they want to. Jakes says it’s a growing and much-needed industry, unlike his former profession in IT.

In fact, he’s planning to work as a strata manager until he’s 75.

“I wanted to get into something where age was going to be an asset,” he says.

“IT is a young man’s game. This isn’t. It’s a real growth industry and every second building in NSW is a strata block that’s being built.
There are 85,000 strata blocks in NSW and we need another 150,000 units by 2020, just to keep up with expected immigration.”

Higginson agrees. He says the future is in density living and body corporates will always need management.

“Around 20 years ago, people did it on the back of notepads,” he says.

“You just can’t do that anymore, because it’s dangerous to get something wrong.”

It’s also interesting and rewarding, helping so many people with their day-to-day lives and getting to know so many different types of people.

“I wanted to get into the industry because I wanted to get into a more personal industry,” Jakes says.

“Out of the 800 unit owners I have, 750 are happy most of the time. That’s one of my skills. I’m good at conflict resolution and I thought I could make a difference.”

In fact, Jakes believes he’s more successful as a strata manager than an IT expert.

“I’m now in charge of my own destiny,” he says.

And if you haven’t already guessed, a strata manager is always busy. Make that, flat out. But that’s just the way Jakes likes it.

“I wouldn’t want to be in a business where you’re sitting there, waiting for the phones to ring,” he says.

If you’re a property lover, you’ll also find out about the bargains first. You’ll be notified when there’s a mortgage sale.

“Invariably, they’re in debt collection and we have to chase their fees,” Jakes says.

“The selling agent who wants to know what the strata fees are will normally contact us as well.”

There are some nice gifts at Christmas time from contractors and tradies. Jakes spends about $100,000 a week. Paying them for jobs across hundreds of units. They usually send him wine each year, and even take him to the football on occasions.

Higginson adds as a strata manager, you can write your own cheque and pay your own fees first.

“You control the accounts,” he says. “You can pay yourself first, you’re part of the budget. From a cash flow perspective, every month, you get covered.”

And because it’s a niche market, there are lots of opportunities to expand a business.

Those who do well can find good opportunities. For example, Jakes is currently negotiating to take over as manager for a commercial block.

“The owners are more business-minded and often easier to deal with (for a commercial bock),” he says.

“They want their meetings during the day, not after hours, and owners often own other commercial or residential units.”

The Cons

The biggest con when it comes to strata management is getting abused on a daily basis.

This isn’t an industry for the faint-hearted. You have to have thick skin and it’s very much a case of sink or swim.

“You have to roll with the people abusing you,” Higginson says. “You’ll come into the office on a Monday and have more than 100 emails abusing you. Some of them will be repetitive from the same owners.

Things like ‘the noise are still loud, the music is still playing.’

For things like this, there’s nothing you can do apart from the ring the coppers.

But people think because they’re living together, there are different rules.”

There might also be complaints about how long someone parked in the car park for.

“Guys, it’s a car park. It doesn’t matter. But everyone gets emotionally involved.”

Higginson has also dealt with what he calls the ‘committee commando.’

It’s someone who has volunteered to be on the committee, but they then abuse their power.

“For some people, it’s the highest position they’ve ever held in their life,” he says.

“It’s a warning sign when someone has a business card which says ‘chairperson for a body corporate.’

People take it that seriously.

They usually have nothing else to do.

Those sort of people is really difficult to deal with.”

Some buildings might have so many arguments and issues, it’s actually worth parting ways with them as a manager.

negative positive

“You might spend $50,000 worth of time, dealing with $20,000 worth of revenue,” Higginson says. “The discipline you need is to get rid of the bad buildings.

You might as well let them go to your opposition because it will actually hurt them.”

The hours are also quite “anti-social” according to Jakes.

“Most of our clients want their meetings after 6:30 pm. It's long hours and that’s why a lot of people leave the industry,” he says.

“Meetings can drag on anywhere from 6:30 pm until 9:30 pm.

Younger people get fed up with their social life being impinged on.

It’s an industry where you have a lot of problems with staff retention.”

The high volume of work and landlords can also be overwhelming. A normal workload would be managing 10 unit blocks.

But the reality is you’ll have at least 30 to deal with.

“With the information of age, you now get bombarded by more people, wanting a faster response and a faster turnaround,” Jakes says.

He recently took over from the strata management company, which opted to sell because they refused to send emails and only respond via letters and faxes.

This is no longer viable if you plan to be successful.

“People would never send a letter and a fax is a stretch,” he says. “No person would accept those sorts of arrangements.”

There are also high liability costs and liability is increasingly being transferred to strata managers. In the past, strata managers wouldn’t deal with the council or state governments.

Now, there are new laws each year, including the annual fire safety statement.

“If you don’t get it in on time, you get fined %$500 in the first week, then $1000 a week until you get it in. That’s a massive liability.”

Jakes did miss this statement for one unit block once when he was moving office.

But most strata managers know they can’t afford to forget about the fire safety statement for each and every unit block.

“Owners don’t understand those sorts of statements and liabilities. Then, if there’s a fire, fire companies need access to 80 percent of units.

“If the owners won’t cooperate we can’t force access.

But then it’s our responsibility, even though we can’t enforce the access.

You can send letters and they’ll ignore you. You threaten the owners with callback fees. They ignore that too.”

There are other types of legislation that are complex and overwhelming.

For example, every window in NSW that’s above the ground floor needs a lock on it within the next five years.

“It’s not up to us to enforce it or police it, but then we get the blame if it doesn’t happen,” Jakes says.

It’s the same problem for ensuring there are fences around pools.

And then there’s the issue of insurance problems within individual units.

Some landlords don’t take out landlord insurance, but then get upset when there’s a burst pipe and their unit floods, destroying the carpet.

“When their apartment gets flooded they automatically assume strata will cover their damage. It only covers damage to the building,” Jakes says. “It doesn’t cover the carpet, the paint, and the internal fittings.”

And unfortunately, strata management is a tough industry and increasingly competitive.

“Back in the 1980s, a typical strata owner would pay their manager the equivalent of $480 per year for their services. Today, they pay about $250. The margins are being squeezed.”

Bad legal advice can also be expensive. Jakes says compliance can keep you awake at night. And of course, there can be some “toxic owners.”

Landlords want things done yesterday and they also tend to exaggerate.

For example, a client of Andrew’s recently wrote to him about a tree. He described how he could sue his neighbor if a branch fell on him and how the leaves clog the pool filter.

Another client didn’t get his own way, so wrote to the Australian Treasurer, Joe Hockey, to complain.

But Jakes takes this with a grain of salt. It's water off a duck’s back because he knows his stuff and he’s aware that he’s usually in the right.

The majority of landlords are wonderful and kind to deal with, and that’s precisely why Jakes has no plans to opt-out of strata management anytime soon.


About Lauren Day Lauren Day is the former deputy editor of Australian Property Investor Magazine and an avid property investor.

Hi Lauren - Great to see you're still publishing post API magazine. Strata Management's even tougher now. Latest curse being 'Product Review'.

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