Is this a rort?

Evening all,

My parents own an apartment on the Sunshine Coast and are having a couple of issues with the onsite managers and was hoping to get some advice on what to do from here.

Firstly, they are being charged for people staying in their unit that use Diners Card and American Express. I thought people who use those cards are the ones usually being charged. In the last 5 months they have been hit with 5 charges of 17% and 14%. On stays of up to $2500 this can quickly add up. On top of this the onsite managers are charging 12.5% commission and cleaning on top they are not making much money at all. Surely this is a rip - off and cannot be charging Mum and Dad this much? Has anyone else ever experienced something like this?

They also have a special going where holidayers can pay for two nights but stay for 3 but my parents have told them numerous times that they don't want to be included in that special as once they take out cleaning ($95), power, onsite managers commission (12.5%) and wear and tear on the property they are making bugger all for the 3 nights.


I know that's why holiday apartments make for a bad investment and I wish I was old enough that i could of found propchat years ago so I could talk them out of buying it.

They are looking at doing permemant rental through an external agency like Ray White but the onsite managers have cracked it saying they will make it hard on the new tenants and not help them at all if they decide to go that way.

Unfortunately they don't want to sell atm because they won't get the price they are after but they are pretty bullish that it will go up in the next few years so they are trying to get by until then.

Any advice on what they should do would be greatly appreciated.

Thank you all advance,

Mitch

P.S if anyone would like to buy an awesome 2 bedroom penthouse with beautiful ocean views and a rooftop please let me know. $700k+

 

Not with those sort of costs and issues.

I think they may be breaking the law with charging for card users, unless it is in your contract, it is the card holder that has to accept any charges or pay via another method, so I would look into that one.

As far as the rest goes, I would rent it out via any agent I wanted, the onsite guy could go jump after saying that, if that is what was said. See if you can get him to put it into writing & go to whomever controls these people in QLD. They are having a lend of your parents IMO.

 

I have heard the same complaints from other holiday unit owners. It seems the managers end up with most of the money. However, the manager is employed to act and should follow instructions from the owners.

Ignore the bullying. Your parents will get a far better result by putting in tenants on a six or twelve month lease. An external PM will handle all aspects of the tenancy and the complex manager won't be involved.
Marg

 

So what if they crack it? It doesn't sound like the managers are helping at the moment anyway, what could they possibly help new tenants with??

 

Where is the unit. I would love to buy it and go and have a quiet chat with the managers...

 

They haven't signed in an agreement fir almost 10 years. 4 different onsite managers have been and gone since then. Could they call an ombudsman to find out about those charges?

Appreciate your help.

 

Is the management agreement still valid? Ie did the management company get sold or only the rights?

 

I believe only the rights. Unsure if the agreement would still be valid as they haven't signed anything under the new onsite managers.

 

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This could be part of the reason they are not being helpful as the agreement is what gives them the value in their business.In saying that -I wouldn't want to work with anyone carrying on busimess like that.Get a few outside agents to quote estimate a normal tenancy and compare the returns.I usually go sgort term let in oct-march and long term lease in the others if a beachside tourist spot

 

We had a similar issue with onsite managers a few years back - they (managers) even went so far as saying that they would stop any other external property managers from entering the property (if I changed management from them). Their fees were ridiculous, as were the cleaning and maintenance charges - and vacancy rates were a bit average as well...

Ended up changing to external managers and couldn't be happier.

 

So the onsite managers haven't stopped your property manager from getting in?

 

I don't see how the onsite manager can prevent entry.

As owners, your parents are entitled to a full set of keys which they can give to their PM. The onsite manager can't deny access to visitors or other people authorised to be there by owners.

If the onsite manager is handling rentals, he/she will have to have a RE license. I guess a complaint could be directed to the relevant authority.

It's all just bluster designed to intimidate your parents into staying with them and continuing to be ripped off.
Marg

 

On what legal basis could they even attempt that ? for instance, who is on the title of the property, your parents and a lender possibly, this hand me down manager ? not likely.

You would call in the police if they had a go at that.

Unless you have some sort of contract or something preventing you doing this that we cannot see, your parents can get someone who is more business like to look after the place.

 

The average merchant service fee charged by American Express Australia Ltd for the period 1 July 2016 to 30 Sept 2016 was 1.65%.

From this page
Doing Business with Amex

Seems a bit low as the merchants are charging something like 4% on purchases s advertised in stores.

There may be extra facility charges that the manager pays but that should be spread across all transactions or better still come out of his 12% management fee.

Whatever the 14-17% is just an absolute rip off.

Don't let the Onsite manager bully your parents. Have a look what is in the agrrement from 10 years ago and act accordingly.

 

I know where your parents unit is. Tell/advise them to rent it privately long term through an outside management agency. There is precisely sweet FA the onsite manager can do/say about it without a current signed agreement, besides huff and puff. There are many units in the complex and I know for a fact that they're not all short term holiday rentals. Some are even owner occupied. Even @ 8% PM fees and slightly lower, but reliable weekly rental $$ will see them in front. Unless it's being holiday let EVERY week for $1000+?

It's their property at the end of the day. Onsite Manager is not the one responsible for making your parents mortgage repayments.

The rights to onsite holiday rental management in a complex is bought as a business. Hence the high management fees and cleaning costs. The more unit owners that leave the holiday rental "scheme" the less money he/she/they (management) make and, as discovered can get a bit snarky at losing the $$ to outside agencies. Also this may be why there have been 4 onsite managers through there in the last 10 years perhaps?

Rental demand in the area is hot at the moment and only going to get worse. With no roads to cross to access the beach and waves literally at your doorstep, they'll not struggle to find decent tenants willing to pay for the position.

 

No, legally they didn't have a leg to stand on. They tried to bully the new PM, but she had enough front to tell them where to get off. I went to a BC meeting a few months after the changeover took place, and they were still shirty at me. Haven't been to once since, but hopefully the dust would have settled by now!