A strata roll can be an excellent way to generate revenue for your real estate agency but there are always roadblocks and problems to overcome.

There are several benefits to adding strata rolls to your real estate business. These include being spared the need to deal directly with landlords and tenants, and the ability to have up to 300 lots under a single manager. 

However, like anything else, running a strata roll can have its problems. Here are some common issues and how to overcome them. 

Dealing with a rebellious committee or individual member

Every agent and strata manager has experienced a client or clients who claim to want their help but then make things difficult at every turn. 

If things have become hostile, the situation needs addressing sooner rather than later. Some tough conversations will need to be had. 

If you feel you are not meeting the expectations of your Owners Corporation or the Executive Committee, call a meeting to go over your responsibilities and what you’re being paid for. The OC may not realise how much you do or they may not be aware of the specifics of your contract. 

You may also want to clarify their concerns and set up a reporting system so they know you are completing tasks as required. 

For an individual who has ‘gone rogue’, the situation can be complicated. A smaller meeting or one involving the individual, you and/or a senior member of the Executive Committee may be the best approach so they don’t feel overwhelmed. 

According to Consumer Victoria, “Lot owners can add or remove a committee member by ordinary resolution at an annual general meeting or a special general meeting, which requires support from at least 50 percent of lots or lot entitlements. Members may also be removed by an ordinary resolution of the committee if they are absent from 25 percent or more of committee meetings within a six month period, without giving prior notice or a reasonable explanation for their absence.” 

It’s never an easy process but can be beneficial for the long-term ‘health’ of the property and the people involved with running it. 

Lack of funds or desire to upgrade

Some buildings are plagued with financial difficulties. If the common property needs improvement or preventative maintenance, you can run into trouble if the Owners Corporation either can’t afford to or won’t commit to doing the work. 

If general reluctance is the problem, it’s worth pointing out the legal responsibility of keeping safe, well-maintained premises. You could also spend some time doing a cost/benefit analysis, e.g. roof repairs are far cheaper than roof replacement. 

There is the potential trade-off of cheaper insurance for a building which can prove regular maintenance is taking place. And it makes economic sense to keep the property in good condition as a way to maintain the value of the lots within. 

Should failure to upgrade or maintain premises be a purely financial issue, you have a few options. Firstly, it may be a matter of chasing down unpaid levies in order to free up cash flow. From there, it comes down to a choice between: 

• Revising the budget so repairs can be afforded at some stage in the future (providing the repairs aren’t urgent)

• Raising a special levy and charging lot owners for the repairs or upgrades (this is unlikely to be popular, however the lot owners may understand the trade-off of raising the value of their property)

• Raising annual levies so repairs can be afforded

• Raising funds via a Strata Finance loan

Solving cladding problems

You’re no doubt aware the removal of dangerous cladding which is deemed a fire threat is compulsory in Victoria. However, describing this situation as a headache is an understatement. 

The first step is to have your building inspected to determine whether cladding is a problem. An inspector can submit a report to a fire safety engineer, who will help determine the risk at your premises. 

If cladding is an issue, your building may be covered under insurance. It is worth investigating this as a possibility, however many strata premises have found they aren’t covered. 

Your premises may also be eligible for government assistance to help take care of the cost of upgrading cladding. Take a look here for more information: https://www.vic.gov.au/cladding-rectification-funding-guidelines. 

Unfortunately, it may come down to the Owners Corporation needing to fund the upgrade themselves. It’s never nice to be the bearer of bad news but stick to the facts, reiterate you have done your due diligence and do your best to help facilitate the most cost-effective decisions. 

Handling smaller strata rolls

While most real estate agents prefer to handle larger strata rolls, and very small blocks don’t usually require the extra support, there are still blocks of 12 or fewer apartments which may request your services. 

There may be some areas the Owners Corporation are happy to take on themselves in exchange for a lower fee. 

If you do have to take on smaller stratas, choose ones which are close to your office or to other clients. This way you can pay visits without having to go out of your way. 

Sometimes a smaller strata isn’t worth your time and effort so do a cost/benefit analysis before you take on this kind of job. 

BDH Solutions are rent-roll and strata roll brokers with over 30 years experience in connecting the right vendor with the right purchaser. To stay up to date with our latest listings, register here.