Barry Turner’s company Building Management Consultancy and Services (BMCS) is a leader in the management rights industry. He has inspected and prepared reports for more than 1000 properties and his goal is to ensure independent recommendations are fair to both owners and managers/caretakers.
He spoke to Grantlee Kieza:
Q: The management rights industry is booming?
A: It’s the future of living. More and more people are moving into apartments and townhouses. A lawyer said to me years ago “Barry you have the only recession proof business in this country, you'll never be out of a job”.
Q: You just turned 75 but you’re not slowing down?
I'm still working hard and I feel like I’m no more than 50. Age is an attitude not a number. I've got 26 files on my desk at the moment which are all works in progress.
I live on two acres at Doonan in the Noosa Valley and I walk four kilometres every morning. I've been working from my home office here for 20 years. It's a good work environment.
Q: How did you get into management rights?
A: I came from the motor trade where I worked for 25 years. I had my own freehold service station for 15 years, just out of Caboolture, at a little place called Wamuran.
I was a qualified A grade mechanic and employed four other mechanics. I had a big workshop. When you work in a country area you work on everything from lawn mowers to D9 bulldozers. It was a major fruit growing area for bananas and pineapples, so we did a lot of work for the farmers.
We had friends in management rights on the Gold Coast and we'd spend the weekend with them, and I got pretty interested in the business. We decided to sell the service station and we went into management rights in about 1990-91.
Q: What was your early experience in the business like?
A: It was in Caloundra at the Joanne apartments. I had two buildings and two bodies corporate to deal with and the place was tired. When I looked at the management agreement, I had an A4 page with the schedule of duties on it which included “maintaining the garden, cleaning the swimming pool”, but it was all very vague without detail.
Q: Being a mechanic, you wanted it run like a well-oiled machine?
A: In the motor trade we had workshop manuals for every make of vehicle, logbooks for all the servicing and service schedules. I looked at the management rights industry and I thought there was nothing like that. So, I wrote an operation manual for Joanne Apartments and set it up with all the details, the way I ran my garage. It covered everything you could think of.
The body corporate adopted it as part of the management agreement. When I came to sell the management rights about eight years later the first people who looked started asking questions and I handed them the operation manual. They came back the next morning and signed a contract for the business because everything was set out clearly.
Q: What is the biggest problem in the industry?
A: It’s still ingrained in everyone's brain that a manager’s salary should be based on a fee per unit per year. That idea has been in this industry forever, but I've inspected more than 1000 properties throughout Australia and New Zealand and I've never seen two properties the same.
We work on eight different types of management rights, we have high rise buildings, medium rise, the low rise, the walk-up buildings, and they're all different; then we go to the townhouse buildings, gated communities, retirement villages, and the commercial strata title. I've also done two strata title hospitals, a couple of marinas, strata title car parks.
Q: The managers’ caretaker duties are different for every property?
A: Yes, but so many people still use generic management agreements. That's the whole basis of the problem in the industry because if everything is not set out clearly you get individual interpretations thrown in. Sometimes the manager thinks he has to do that job once a week but the body corporate wants it done once a day. Everything should be clearly spelled out to stop disputes.
Our database, for instance, covers 71 different types of recreational facilities across the industry.
Q: How did you begin the consultancy work?
A: I had a friend who was working on resolving disputes over management rights and salary reviews and I bought a two-thirds share of his business.
I took the business from primitive spreadsheets to a cloud-based system that allows us to give very detailed reports on management rights and remunerations. I've identified 2700 individual duties across all properties, and I select each duty that applies to each building and the daily, weekly or monthly responsibilities.
We drop in an estimated time for each duty and come out with a comprehensive report, breaking the tasks right down to minutes. We can then apply contract hourly rates and accurately decide what the remuneration should be.
Q: What’s the biggest building you've worked on?
A: I've just finished a large complex in Brisbane, which has a shopping centre and three high rise towers on top of it. I also prepared the schedules of duties “off-the-plan” for a 40-storey building in Adelaide that has four bodies corporate in the one building and I reviewed a big project on the northern beaches of Sydney that had 15 buildings in one scheme.
Q: Your company is getting in on the ground floor of management agreements so to speak?
A: Yes, I'm doing a fair bit of work for developers now. They send me the plans and I set up the schedules of duties and determine the remuneration “off-the-plan”. These schedules then form part of the management agreement rather than just see a generic schedule of duties applied to the scheme which inevitably leads to disputes further down the track.
Someone who buys management rights is making a huge investment in a complex?
A: When someone spends millions of dollars to buy management rights, they are often the single biggest investor in the complex. They should be going that extra yard to protect their investment and maintain its value rather than let it run down because of poor management.
A lot of managers don’t like a specific schedule of duties because they want to do their own thing, they don’t like being tied down to a specific agreement but if the complex has been properly reviewed, the remuneration will commensurate with the schedule.
Q: What advice would you have for someone who wants to buy management rights?
A: First, engage a lawyer who is experienced in the industry. Do your due diligence. Have a very good look at the management agreement. Look at the reason why the manager is selling. Is it because of disputes with the body corporate?
Many people going into the business don't know what the job really is. The research we've done shows that between 59 and 70 per cent of the purchasers of management rights are first time buyers, never managed a complex before.
There are a number of training courses available for managers and there is great support from ARAMA (Australian Resident Accommodation Managers Association) to assist along the way.