On-site Caretaking fees

Discussion in 'Property Management' started by NedKelly, 2nd May, 2020.

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  1. NedKelly

    NedKelly Well-Known Member

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    I am currently reviewing our strata budget and as we have an on-site manager these fees represent the largest expenditure in the budget. I would be interested to know what percentage of the budget other schemes pay for their on-site manager. If you have that number could you let me know so I can work out where we stand. Thanks
     
  2. Pumpkin

    Pumpkin Well-Known Member

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    There are many factors that determine this.
    From experience, it can range from 60% to 90%.....
     
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  3. NedKelly

    NedKelly Well-Known Member

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    I have been reviewing previous years fees and due to the automatic fees increase in the caretaking agreement combined with the fact that we have made good savings in other areas over the years this percentage has now increased to 73% of the total budget which seems high to me.
     
  4. qak

    qak Well-Known Member

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    The caretaker's fees are independent of other costs, that doesn't seem like a logical comparison to me. Is it possible you are saving on other costs because the caretaker is doing a good job?

    I'd be looking at what the caretaker costs vs what alternatives are actually available to the scheme?
     
  5. Pumpkin

    Pumpkin Well-Known Member

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    Whilst a good indication for quick comparison, it is hard to pinpoint what percentage is fair.
    Factors includes scope of works of the Caretaker, size/facilities/age/condition of Complex, whether it's short or long-term, or combined rental, and how diligent the Committee is.
    And as you said, the annual salary increment also plays a big part. It can vary between CPI and 5%. So the compounding effect is huge for a 25-year contract.

    The industry tends to compare cost per household, or per entitlement if there are mixed-development.

    Management Rights industry is a very specialised industry and there hasnt been two Schemes that are really comparable.
     
  6. Marg4000

    Marg4000 Well-Known Member

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    You will be bound by the conditions of the contract signed with the manager unless it is up for renewal.
     
  7. NedKelly

    NedKelly Well-Known Member

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    So what would be an average cost per household? Do you have any examples?
     
  8. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    No scheme is the same, no agreement is the same, every scheme has it's own uniqueness and requirements. As a rule of thumb, define your expectation, then go through the exercise of quoting to have it done externally, including ADHOC on-call work and after-hours and on-demand, etc, then compare that to what you pay your Caretaker. In most cases, if you do an honest appraisal, it would cost you 3-5x what you pay your Caretaker. People seldom realise this because they have little understanding of what actually goes on behind the scenes unless a particular matter directly involves them. If you have ****** managers who don't care that's never a good thing. But if you have a good manager who cares and takes ownership of the scheme and treats the whole scheme as if it were their own, including things like security and safety for occupants - you can't put a price on that.
     
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  9. NedKelly

    NedKelly Well-Known Member

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    Yeah right! Multiply that over the number of lots in the scheme and our manager would be raking in over $600,000 a year. Nice work if you can get it.
     
  10. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    Read what I wrote, rethink what you just posted.
     
  11. NedKelly

    NedKelly Well-Known Member

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    You have to put a price on it because the BCCM legislation allows these contracts to be bought and sold like commodities and your good manager could be replaced by a bad manager in a short period of time with no redress.
     
  12. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    The point was a value comparison to having someone who owns and lives on site and takes their job seriously to the point where they're essentially on call 24/7/365 and take ownership of problems because they are a levy payer too vs. a scheme having to outsource everything at any hour and dealing with delays and bs. That's where my comment re: costing the scheme 3-5x more comes from, it's not to say the manager should be paid that, it's to try and demonstrate the value to the lay person. Anyway, there are ways schemes can address this, such as time in motion studies and reviews, but it's not an easy or cheap process and both parties generally need to be willing to participate otherwise yes, schemes can be stuck with something that's not great and through no fault of their own as the developer is the entity that sells the original rights and onus comes back to lot owners during their pre purchase due diligence whether to buy into a scheme or not with such an agreement in place etc.
     
  13. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    A Body Corporate actually has a lot of power in refusing consent to transfer..
     
  14. NedKelly

    NedKelly Well-Known Member

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    I would disagree with you on this. The Body Corporate cannot unreasonably withhold consent to an assignment unless there are significant and provable grounds to refuse consent. The manager is very likely to challenge the reasonableness of a body corporate’s decision to refuse consent to an assignment and if the manager takes this to court and wins then the body corporate could be liable to pay significant damages to the outgoing manager as well as his legal costs. There are very few body corporates who would risk that. I have seen many transfers include a provision that the new manager attends a Caretaking Couse to overcome most committee objections so unless the new manager is a convicted fraudster or similar the Body Corporate have got no chance.
     
  15. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    Change lawyers... playing devils advocate, this process can [lawfully] be made very difficult and costly and at the end of the day a Bodies’ Corporate will generally have more finance to throw at the problem if they genuinely do not want to grant reasonable consent for legit reasons, that’s not to say it can be stopped, it comes down to the people involved and the lengths they’re willing to go to to..
     
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  16. Scott No Mates

    Scott No Mates Well-Known Member

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    Of course the BC has a say, is it unreasonable to expect the assignee to have a certain level of experience/relevant experience? To have held a similar role previously?
     
  17. Pumpkin

    Pumpkin Well-Known Member

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    You can do your own research on this.
    Hint: search for Ads that’s comparable to your Complex.
     
  18. Pumpkin

    Pumpkin Well-Known Member

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    What is your issue here? If it is cost, you can analyze it and decide what you want to do next.
    But if you think they are “bad manager”, articulate this and there is a procedure to follow.
    What I like to say is if someone spend money to buy that MR, it will be silly for them not to do the right thing....
     
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  19. NedKelly

    NedKelly Well-Known Member

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    Hi Pumkin Yes, I found a great website, TheOnsiteManager, that lists everything. No of Units, remuneration, term of contract, office hours and I even found our complex!
     
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  20. Pumpkin

    Pumpkin Well-Known Member

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    Great job! That's a start, there are plenty of other Sales Agents you'd find.
    Happy researching!

    Care to share the results?
     
    Last edited: 10th May, 2020