We are seeing properties that are self-managed much more frequently. Self-managed properties generally are blocks of less than 6 units where the unit owners try to save the money of the management fees by delegating the work to one or more of the unit owners. So what does this mean for the investment buyer?
The general process is the same and like all other Strata Schemes we still order an inspection of the records using a professional service.
1. Availability of the records:
One of the first hiccups you may encounter is the availability of the person entrusted with the keeping of the books. Unlike a professional strata manager whom can make the books available to the inspector during normal work hours, self-managed strata schemes generally are not available at short notice.
The person holding the records on behalf of the body corporate may be on holiday, in hospital or have a full time job so the records can only be inspected on weekends or after hours. Whenever you speak to a sales agent and you become aware that the building is self managed, your first job, or that of your buyers agent is to find out the availability of the records. A professionally managed scheme should in most cases give your strata inspector access within 48 hours. Only occasionally will it take much longer.
2. Personality conflicts between the members:
The one thing missing in a self-managed strata scheme is the referee. The professional strata manager can act as an independent buffer when an issue needs to be resolved. Different personalities can make things a little bit more difficult however we have seen some self-managed schemes working remarkably well.
3. Detail in the record keeping:
In many self-managed schemes the person taking on the role may have previously had some accounting and management experience. Not all self-managed schemes keep records with the same level of detail. This should be picked up by your inspector when inspecting the records. Some examples of this are whether note taking is done by hand or typed and how well the receipts are filed and noted. The level and type of detail in the record keeping will determine how good your strata report will be.
Many of the owners corporations find it hard in the long term to keep being legally compliant.
Buying into a strata scheme that is self-managed should not be a deterrent at all. Just like purchasing into a professionally managed block of units, your strata inspector should be able to pick up any problems if there are any.