Mina Radhakrishnan – :Different
Mark Trowell – Yabonza
AJ Chand – EasyRent
Marie-Anne Lampotang: (00:09)
Hi, everybody. Welcome to Stone & Chalk and the Proptech Association of Australia’s webinar. This is the second webinar that we’re hosting in a series of webinars for the proptech industry. My name’s Marie-Anne Lampotang and I’m the general manager of Stone & Chalk in Sydney. I’m really, really excited to welcome Kylie and our panellists today. But before I do that, just wanted to give a brief introduction about Stone & Chalk for those of you who don’t know who we are. So we were founded in fintech in 2015 and our mission has always been to identify, nurture, connect and propel the world’s best start-ups and scale-ups.
Marie-Anne Lampotang: (00:43)
We do this by connecting them with the five pillars we believe they need the most, which is community, capital, talent, expertise and customers. So today I’ll be handing over to Kylie who’ll introduce all the panellists. But just a little bit of housekeeping beforehand, at the bottom of your screen there’s a Q and A function. During the panel, we won’t be taking questions but if you could pop them in during the session and we’ll pick them up at the end and depending on time and how many questions we’ll have, we’ll cover them. Thank you very much and over to you, Kylie.
Kylie Davis: (01:15)
Thanks so much, Marie-Anne and welcome, everyone, to our second proptech panel, The Disruptors of Property Management. Now, property management is a $5.5 billion industry in Australia, with commission levels per property up to around 7%. And the response rates for tenants for basic repairs and maintenance can take weeks and sometimes months. As well as the fact that we have a workforce around property management that is highly stressed and very mobile. So the industry has long been ripe for disruption but who are those disruptors? And what are the lessons that traditional property managers can learn from their innovations? And what can those disruptors teach other proptechs in the space about working in property management?
Kylie Davis: (02:02)
So welcome, everyone, to the Proptech Association of Australia’s second proptech panel, where we’re discussing the future of property management by looking at the disruptors who are changing the game for landlords, tenants and the traditional business model. So my name’s Kylie Davis and I am the founder of the Proptech Association and it’s great to see so many people on the call today for our second proptech panel. And I’d especially like to thank our main sponsors, Stone & Chalk, who’ve made the event possible. And the Proptech Association board for their ongoing support and enthusiasm for the sector.
Kylie Davis: (02:35)
Now, over the last three years, there’s been an explosion of innovation in property management space. We’ve seen a plethora of tech designed to make the work that property managers do more efficient. And this ranges from the introduction of AI, to challenging the need for trust accounting and automating many of those really dreary admin tasks that PMs have been obliged to do for rentals, so that they’re compliant with legislation and to get tenants in and out of properties. But is that work enough? And has this tech been focused on the right part of the market? So to discuss this issue, I’d like to introduce our expert panel, all of whom are passionate about transforming the sector for investors and renters. Which I think in 2020, is the words we should be calling landlords and tenants, it feels quite feudal.
Kylie Davis: (03:26)
But our first panellist is Mark Trowell, CEO and co-founder of Yabonza. Now Mark has fused a long and rewarding career in real estate with a passion for technology and innovation that transforms and takes… Is anyone else getting feedback or is it just me? Many of you are nodding, you’re getting feedback? Oh, okay. I’m on the South Coast of New South Wales and my internet might be a little bit funky. So if it goes on, can someone pop a note in the chat to let us know and we’ll try and address that? Our second panellist is Mina Radhakrishnan, CEO and founder of Different. Now, Mina has an enviable background in innovation and technology. And she’s worked as a product manager at Google in Silicon Valley and was the first product manager for Uber before moving into venture capital and coming home to Australia and establishing Different. And last but certainly not least, I’d like to welcome AJ Chand from Instarent. So before establishing Instarent in 2017, AJ was chief technology officer at SEG and has held roles at WorldID Verification and Telstra. So welcome, everyone, to the proptech panel.
Mina Radhakrishnan: (04:49)
Thanks for having us, Kylie.
Mark Trowell: (04:49)
Thank you, Kylie. Thanks for having us.
Kylie Davis: (04:50)
So let’s kick off with you, Mark, from Yabonza. Now, Yabonza is taking on traditional property management, what do you think are the key challenges facing traditional property managers at the moment?
Mark Trowell: (05:06)
Well, look, I think you pointed out one way, obviously increased competition is certainly one of those areas. But if you break down traditional property management and actually look at what is involved around that and obviously a lot around transparency, communication, all that sort of stuff. There is a lot of coming into this space that is improving the ability to communicate with them. But more to the point, you’ve got businesses coming in there, they’re coming in on scale. So they’re looking at property management in a different way than what your localised business would have looked at it, who operate within a certain zone or certain area. And these businesses are coming into it, looking at it in a more holistic or corporate sense so to speak, which is going, well, okay, I can then scale this business. I can then look at it right the way across the country. I can then create a professional services area solely around property management, separated from the sales side of the business, that can service tenants and landlords no matter where their property tends to exist.
Mark Trowell: (06:06)
So that’s really some of the things you’re getting and because of it, those businesses start looking at driving efficiency into the processes. Huge amounts of efficiency, which then is passed on to the landlords, the tenants, in terms of price. So what you’re seeing from a lot of these proptech players coming in around the property management space and when they’re lowering fees, it’s not necessarily about lowering fees to try and win business, it’s about lowering fees to make it to what the service level actually costs.
Kylie Davis: (06:36)
And so we’re seeing this move in property management away from just being small, geographically located businesses into more broader, bigger market stuff. What made you want to start Yabonza?
Mark Trowell: (06:51)
Yeah. Look, I think you probably said some of it in the beginning, I’ve had quite a long career in and around property and banking and payments, so to speak. And a lot of them come to together at this point. So I started a career in property management 28 years ago here in Sydney. And also likewise, just after that in the UK for quite a number of years before ending up at Macquarie Bank and actually running a lot of the proptech or the real estate technology for Macquarie Bank. And we would do a lot of deep dives into actually real estate businesses themselves and look at the efficiency around those businesses. And inherently, in looking at those businesses, it was not necessarily bringing in the technology that was going to make them efficient, it needed a wholesale change in the business model itself.
Mark Trowell: (07:36)
And so having my own investment properties in the UK and also in Australia, I was faced with that problem myself around one, I need someone that can look over… Two of them, even though they’re in different jurisdictions, I need one single view. I need this better communication transparency. Tech would bring it a certain way but I need to be able to then change the way the business operates itself. And then that’s effectively how Yabonza was born. I came out of Macquarie Bank and thought well, who better to try it than myself?
Kylie Davis: (08:05)
Fair enough. So your business model, you charge just a fraction of the price of a traditional property manager and I’m getting a lot of audience questions around that that were submitted previously. Is disruption just around the price?
Mark Trowell: (08:20)
No, price is the last thing to do with it. We know you’ll never survive on a price game alone, we’ve seen it in a lot of other industries. It’s got to come down to a lot of the key factors around transparency and communication. But how we look at it also is, we look at property as an asset for a landlord. They buy an investment property, if they’re investing into investment property, it’s for a certain reason. Either income, capital growth, there’s a number of trigger points in there. So really, what you’ve got to do is you’ve got to work with those but at the same time, you’ve got these tenants sitting on the other side as well. And you’ve got to view the tenant as a guest. Like a hotel, a guest comes into a hotel, you’ve got to make it attractive for them. So for us, efficiency drives price. So price is the last thing that we look at. Efficiency, communication, transparency, all of these things, asset ownership, retention, et cetera, sits above those.
Kylie Davis: (09:15)
So price is a big thing on your website. Are your landlords coming to you attracted mainly to the cheaper price?
Mark Trowell: (09:23)
We get a number of things. Repairs and maintenance tend to be the biggest thing that people come to us for. Frustration around repairs and maintenance, which is quite interesting. Where we tend to attract most landlords from is the fact that our serviceability area… We’re not constrained to a particular localised zone. We can manage property right the way across Australia, no matter where it is and in fact, we do that today. We manage properties from you name it, Alice Springs, Mount Isa, Darwin, to obviously all the capital cities, it’s irrelevant to the area that we’re in.
Mark Trowell: (09:59)
And what we’re finding now, as a result of that, when we started out, our average landlord had 1.2 properties. That’s now ticked over two and we’re finding now, the average landlord coming on has between six to 20 properties. So we’re finding what we’re getting now is, landlords really wanting one point of call. So that seems to be part of our main attraction, is going, I can go to Yabonza, I can get what I need in terms of transparency, communication and obviously, an efficient price structure. But more to the point, I’ve got one point of call to go to, I don’t have to deal with having three or four property managers or different people on the ground doing all these different things. I’ve got just one point of call.
Kylie Davis: (10:35)
So how are platforms like Yabonza changing the employment opportunities for property managers?
Mark Trowell: (10:43)
Yeah, that’s an interesting one. I actually gave a talk about it a few years back, to a room full of 600 property managers and that was quite an interesting chat. Look, how we look at it is, it’s not necessarily proptech that’s channelling it, the consumer is demanding a different way of working from now. And one that I gave at that talk was around, you’ve got to respond to what the consumer’s saying but look for the opportunity in what these platforms are bringing along. You’ve seen it in a lot of other industries, where platform technology has come in and actually created a different way of people working. Now, if you look at a real estate firm, where you’ve got obviously your licensee and the individual property manager, that property manager, I actually feel for them because a lot of them are overworked. As you said at the beginning, right? They’re stressed, they’re under a lot of pressure, they’re capped to have a certain amount of things that they can do. But it’s around, how do we create opportunities for those people?
Mark Trowell: (11:37)
And for us, we have an on demand workforce right the way across Australia. And that has actually been born out of either current or ex property managers and we’ve now created that facility to give them that flexible working around their lifestyle. And we’ve particularly seen this during COVID, really with a lot of people, in terms of what they won’t to do. People can still work 40 hours a week if they want to but it’s more or less working on their terms. I would say for an existing property manager, look at where you want to go with your career. Is it that you want an ownership or are you striving to be the licensee or not? Where are you in your career? What excites you the most? Because you’ve got property managers out there at the moment that are doing everything, right? They’re doing from repairs and maintenance to opens for inspections, property condition reports, leasing, you name it, right? And that’s generally why they’re stressed out because they’ve got this huge scope. Really focus on what interests you the most and go after that. And that’s why platforms like Yabonza provide those opportunities for existing property managers.
Kylie Davis: (12:40)
Fantastic. So Mina, let’s move to you now and to the… Now, with your background at Uber and Google, you were really strategic about your move into the property management space. So tell us why property management was so appealing to you to get into as a technology business.
Mina Radhakrishnan: (13:00)
Yeah, I think Kylie, you alluded to it a little bit before, which is this idea that there are owners and there are renters, right? And nothing’s changed in this industry in a really long time. And I think if I learned one thing from Uber, Uber’s absolutely a tech company but it’s also just as much an operations company and a logistics company, it’s about moving real things in the physical world. And I think that when you bring together technology and the physical world in that way, you actually can create a better experience for people overall. I remember being in San Francisco before Uber existed and trying to find a cab on a Saturday night and just literally standing out in the rain for 45 minutes trying to hail somebody down. And it was just awful, it was a bad human experience and I think there’s very similar parallels to property management. Where it’s like, it’s your home, it’s such an important part of your life.
Mina Radhakrishnan: (13:45)
And because there isn’t good technology to make that experience better, it doesn’t feel good. It’s like, why am I waiting three weeks for my air conditioner to be fixed? Why is there constantly a leaky tap? It never ends and so I think for me, when I looked at that, it felt like property management is a very, very similar area. It was real world physical things that you can use technology to do better. Because it’s all about, here’s a task, it has to be recorded, it has to be followed up, it has to be confirmed, it has to be finalised. And I think as people, the things that we’re really good at, sympathy, compassion, empathy and negotiation, those all play a part in property management as well. There’s just this big component of have a task, follow up on it and make sure it’s done. And I think that’s the stuff that technology’s really good at. And it felt like there was a way to make this just a better human experience for both owners and tenants, using technology to do so.
Kylie Davis: (14:34)
So what’s wrong with traditional property management? With the way that we’ve done it, with one person trying to look after a landlord and a tenant on the other side.
Mina Radhakrishnan: (14:46)
Yeah, I wouldn’t frame it as wrong or right. I think there’s different ways to be able to handle it. I think some of the concerns that arise, right? Are that you typically have one property manager managing everything to do for 150 portfolios, right? That includes actually running out to the house to do inspections, to do routines, to manage whatever needs to be done and it’s really hard. It’s really hard to be in the office because you’ve got to drive 30 minutes to go somewhere, spend two hours there, come back and in the meantime, that’s five hours away where you haven’t responded to anything. It’s really tough. People can get frustrated and they can get upset because there’s no… What’s going on? Why hasn’t this person replied, even just to say hey, I’m out of the office and doing these things, it’s really tough.
Mina Radhakrishnan: (15:24)
I think a second thing is that while there is technology in the space, the technology is about tracking. It’s not about doing the job, right? And so I think that makes it harder as well because at the end of the day, you still have to do everything and it can get overwhelming because property management is a tough business. It’s a really tough business. It’s a lot of people coming to you with problems most of the time, right? And I think as a property manager, you need support, you need processes, you need technology that takes away some of your work. And I think that’s the really challenging thing, it’s hard to expect one person to do all of it for one set of things. And you can never really become an expert at things, you can’t become just really, really good at understanding maintenance or great at managing the process of lease renewals or doing any of those kinds of things. Whereas the approach that we take at Different is more of a specialised approach in that way, right?
Mina Radhakrishnan: (16:10)
We have a team of people that works on things and teams of people are responsible for core areas. So our maintenance team for example, has really clear and accountable business metrics. They’re responsible for making sure that 90% of maintenance requests that come through are assigned, closed and fixed within 14 days of it going to a tradesperson. And we measure that, we know exactly how long it takes for us to do every single maintenance request, we know where that is. And because our team owns that metric, they just work so hard to get it done because they know that that’s theirs and they own it and I think that that’s a really powerful thing.
Kylie Davis: (16:48)
Fantastic. So Different charges a flat fee. So, what? $100 per property.
Mina Radhakrishnan: (16:56)
Kylie Davis: (16:57)
And that’s both significantly cheaper to what property managers charge but it’s also even cheaper than what the other disruptors on this panel are charging. So what makes up that fee or how are you able to charge that fee and are you actually even disrupting the disruptors?
Mina Radhakrishnan: (17:16)
Don’t know about that, I’ll leave that to them. But in terms of how we pick the fee and as Mark alluded to earlier, that’s the least important part of our conversation with owners and renters, right? It’s like, yeah, it’s $100, great. Let’s actually talk about what you need and where you’re trying to go from and it just makes it really simple. We put our pricing up on our website, it’s front and centre, it doesn’t change for anybody because we don’t need to offer discounts. We don’t need to do any more, that’s just our price, that’s who we are and if you don’t like it, that’s okay too. So I think that it just makes it a lot simpler to be able to focus on the real value to owners, which is around transparency, communication.
Mina Radhakrishnan: (17:48)
And I think the biggest thing is I just don’t think percentage fees are fair. I don’t think that, for example, a two bedroom apartment, just because it’s in an area that the owner happened to choose that is more popular with people and costs $100 more a week… What has the property manager done to then reap the benefits of that? I just don’t think it belongs there. So my view on it is that I think a flat fee is fair because it represents the actual value of work that we do. Whether it’s a one bedroom or two bedroom or three bedroom, the word doesn’t matter that much, it’s fairly simple, right? I can tell you that any given time, 20% of properties have an open maintenance request. Very few properties have more than two, three, four maintenance requests in a year. So we can manage that process around it and that $100 was meant to… It’s created from the point of view of just being fair, simple and easy to understand. And we can provide a high quality service at that price and continue to thrive and that’s what we want to do. In fact, if there’s a way for me to bring it down even further, I would do that too.
Kylie Davis: (18:44)
So what’s the information that Different’s able to provide to investors or to tenants or to renters, that traditional property management doesn’t or doesn’t do very often?
Mina Radhakrishnan: (18:59)
Sorry, Kylie, you just broke out a little bit there. But let me just make sure I understand the question. The question was around, what is the information that Different can provide to an owner or a renter that a traditional agency wouldn’t be able to?
Kylie Davis: (19:12)
Yeah, that’s it.
Mina Radhakrishnan: (19:14)
Yeah, I think it comes in a couple of key things. One is because our business is based on technology and on data first and foremost, right? So for example, when a tenant logs a maintenance request with Different… Look, you can have tenants send requests by email, by SMS, by all of these different things. The challenge is that what you’re dealing with at that point is just a bunch of free text and it’s really hard to take free text and analyse it. So what we do is that when a tenant logs a maintenance request, it’s not hard to do but it does require a certain amount of data. You have to say the room that it’s in or whether it’s throughout the whole property. If it’s in a particular room, what is the specific type of issue? You have to add photos, you have to add videos because we need to be able to get the right tradesperson out, so that they can do a good job on it. And secondly, make sure that the owner is aware of what the situation is. So if there’s additional context that they can provide, then they can send that to us.
Mina Radhakrishnan: (20:01)
So when a owner receives a request for approval of a maintenance request, they’re not just getting some text that says hey, there’s a problem in the house and there’s a leak in the bathroom. Actually, what you’re seeing is like hey, there’s a problem in the house. It is in the bathroom, it is a leaky or dripping tap. Here are the photos, here are the videos of it, here’s additional details. In fact, tenants can even just record a little video if they want or just speak to the app directly and so it’s really clear. So when that comes through, giving an owner a lot more confidence that basically, okay, great, I actually know what the problem is. So I can go ahead and approve this with one click and pull that through. And then because all of it runs through our system, as soon as a request is assigned, the owner gets an automatic push notification to update them, to let them know that it’s been assigned. So does the tenant, they get the contact details and the tradesperson gets all of the same information as well, right? And so each time that a request moves through, when it’s been scheduled, after it’s been completed, all of that just gets automatically updated and shown to an owner, to a tenant. In fact, we even ask tenants for their satisfaction and feedback on how the maintenance request went.
Mina Radhakrishnan: (20:58)
And so I think it’s that aspect around it, right? Where it’s like, if you were a traditional agency and you have to go follow up on every single maintenance request and update the owner and the tenant and the tradesperson every time a change happens, you just can’t do it. There’s just physically not enough time in the day, which is exactly where I think technology starts to come into play on this. And then there’s the whole payment side of it, I think also as Mark alluded to earlier, I think there’s a saying, every company’s a fintech company, right? We handle all of our payments on behalf of all of our owners and renters. And as a result because all of that’s running through our system, we know exactly when a payment is dishonoured and there’s an automatic follow up to go through and get it out, the owner’s made aware of it. All our invoices are automatically tagged back to a maintenance request. So we can identify if an invoice comes in for a maintenance request that hasn’t been approved, nothing gets paid out in that way. So I think that that’s the real value of building technology around the home, the data is the really powerful piece that allows you to very deeply understand homes in a way that I think traditional software and traditional agencies will struggle to do.
Speaker 6: (22:03)
If you’re a start-up, a scale-up or an established supplier of technology to real estate, join Proptech Association Australia. The Proptech Association Australia is a new national not-for-profit member association to grow the emerging proptech industry. We champion real estate and property technology and work to grow the marketplace by helping the property and building industry feel more confident about adopting and investing in innovation. We’re building a community of bold thinking innovators who share their knowledge and share best practise, quality solutions and consistent approaches. So come and join us. Membership is free till the end of 2020, go to proptechassociation.com.au or follow us on LinkedIn.
Kylie Davis: (22:48)
And I’ve just gone to my headset in the hope that that actually makes the sound a little bit clearer but I think that’s actually a great point, isn’t it, Mina? That traditional property management has pretty much evolved out of the ways that things have always been done and the improvements have been incremental. So look, absolutely, sending an email is a lot faster than sending a fax and it certainly can be a lot faster than trying to make a phone call and then leaving messages and playing phone tag all the time. But for the three of you, you’ve come in completely cold and gone, not how do we improve on what’s there but actually, what does an amazing experience look like for a renter or for an investor? So AJ, let’s move on to you now. Now, Instarent does do a lot of things that are both similar to Different and Yabonza. So let’s actually explore what is similar and what’s different but you’re the first direct property management tech that is occurring completely on mobile. So why did you go mobile first?
AJ Chand: (23:53)
Well, going mobile first eliminated a couple of key issues around data security, around realtime notifications for landlords and tenants. And the ability to scale technology as an app, it’s predominantly where the market is going and I think everyone knows that. Mobile is first now, everyone’s using mobile apps for banking, finance or whatever it might be. So for Instarent, we initially started as trying to fix a problem for the self managed market. So really, where we wanted to go in and look at the self management market. I’m a self manager as well, I manage all my own properties and I have for a very long time. So managing the property in terms of the landlord and tenant communication and in terms of transparency between the two parties and enabling all the functions that property managers have and really virtualizing that and bringing it to the end user, which is the landlord and the tenant. Which has been a great test as a start-up. We experimented a lot in terms of looking at the journey that the landlord has in order to self manage.
AJ Chand: (25:05)
And also, the lack of functions that tenants had in the market, which was a bigger issue as well. We can’t veer away from the fact that tenants are making up most of this ecosystem. So yeah, mobile first was a strategy that secures us, I think it secures the technology and it also gives us scalability to move everything forward and investigate peer to peer, landlord to tenant, as how these functions are working. We pretty much pulled apart every single traditional property management function and then attempted to digitise it and bring it to the end user. Sorry, Kylie, yeah.
Kylie Davis: (25:48)
Yeah. Okay, hang on. What’s going on? So everyone does have a mobile phone in their pocket, so it makes complete sense that the tenants would be able to quickly shoot stuff and then upload it straight from their phone. And you guys have been funded or recently closed your latest funding from some crowdfunding from the platform, virtual. Tell us a little bit about how that came about, why did they find you interesting?
AJ Chand: (26:23)
Well, the founders and co-founders of Instarent, we worked with a model that we bootstrap all technology and we don’t raise funds to release all technology until it’s at a point where it’s completely sufficient and is growing and we have validated the market. The reason why we crowdfunded was really to hit a couple of verticals. For one, it took us directly to the consumers, which is what Instarent is, it’s a direct to consumer product. And getting a buy-in from the crowd is ever more important, simply because if they invest in it, then they become users of Instarent and that is what has happened. And really too, there’s a lot of added benefits to doing a crowdfund at the early stages as well, which means that we had a lot of press as well. For example, AFR naming us top six for 2020 and there’s a lot of press, there’s a lot of feedback that comes out of that. Which in cases like Instarent or for a proptech start-up, it’s more important that we get all the feedback and work off the feedback. And the capital is just a added bonus but really, it’s just the feedback that we need from the consumer market in order to keep growing the product and keep growing the functions that help support Australian landlords and tenants.
Kylie Davis: (27:41)
So AJ, what’s your business model? Are you different or are you…
AJ Chand: (27:46)
So we have a couple. So what we do, we have a subscription model and we also have once off buys as well within the platform. So subscription model is $20 per property for a landlord and $10 for every property after that. So really, we put the onus back on the landlord. What we’re confident with is that we’ve automated the majority of the functions that the landlord would need to self manage the property. So that is the subscription part. Also, trades pay us a subscription to be on our platform. And then we have once off purchases like co-leasing with Realestate and Domain, who are our partners. Screening tenants with Equifax, utilities and such that make up for another portion of how our business model works.
AJ Chand: (28:28)
But mainly, we are pushing towards making sure that our subscriptions for our landlords provide the most value that they can. So they can list their property, they can find tenants, they can screen tenants. Within the platform, they can manage all their accounts, which is all digitised to a digital trust. And then you’ve got inspections that are all virtual repairs, that are all virtual maintenance, that’s all virtual. And notices, which is specifically broken down to states that function that way as well. So yeah, really our revenue model really is on the subscription side and the once off buys as well.
Kylie Davis: (29:05)
Just so I’m clear and I think just so we spell that out a little bit more to our audience. While Yabonza and Different are offering a service to landlords and tenants, with Instarent, basically you’re a platform that is facilitating landlords managing their own property and connecting with tenants and then handling their own maintenance and things like that.
AJ Chand: (29:30)
Kylie Davis: (29:30)
Through connected services, yeah?
AJ Chand: (29:32)
Yeah, that’s right. And the purpose behind that was really to understand the journey and the user experience that the landlords and tenants expect, really. We have built that ecosystem now quite well and what that means is that the landlord and tenant have provided us feedback and now it gives us an opportunity to either just scale the product into the agency section by knowing exactly what the landlord and tenant journey looks like or moving it up market. So those are the options that we have on the table that we can take. But the main purpose was to really find out the landlord and tenant journey and really get some feedback and make sure that that is the core of Instarent.
Kylie Davis: (30:12)
Cool. And so as part of this enabling of landlords, one of the things that Instarent manages is the maintenance side. And we are increasingly seeing, even in property management, that the ability to coordinate maintenance and have a panel of preferred tradesmen can be a real asset. With landlords managing their own stuff, how do you then manage maintenance?
AJ Chand: (30:38)
Well, it gives the option to the landlord to actually have a look at the maintenance themselves, if they want to address it themselves. Which the tenant takes a image of the repair, of what it might be and logs it through the app. Every single party gets notified within the app, including Instarent and the landlord. And then the landlord has the option to browse tradesmen that are listed within Instarent. And we vet these tradesmen and we have a good relationship with them in terms of knowing that they’re well reviewed, that they’re five star and that they have got a pretty good track record. So then the landlord has the option to pick a trade within our platform or ask for multiple quotes from multiple trades if that’s what you want to do.
AJ Chand: (31:25)
And digitising it, really from our perspective, is how quickly the repair gets attended to. And it’s about minimising the conflict between the landlord and tenant. And the repairs is one of those things that cause that all the time. Where a tenant would log a repair, then no one will attend to it. And in terms of traditional property management, it does take a while for a property manager to get to that and address that. So because it’s real time, it’s all in the app, all notifications get sent in real time to everyone. So then everyone’s on top of their repair and then the landlord can browse a tradesperson and agree on what it is. And once the repairs are done as well, then the tenant has to sign off on it. They go tick, yeah. The repair was done satisfactory. The landlord does the same and the trades does the same. So the ecosystem actually connects all three of them and gives them all the functions that they need to make sure that that repair gets dealt with as soon as possible.
Kylie Davis: (32:26)
Fantastic. So look, let’s open it up to some general questions for you to dive in on. And we do have an awful lot of audience questions, which is fantastic. All of you have focused on landlords and tenants or investors and renters, as we’re trying to change our language. But what’s the value to tenants to getting involved in this? What’s the tenant journey? Why is it better from a tenant point of view? And I think Mina, you actually offer for tenants to sign up with you directly as well. So let’s talk about tenants.
Mina Radhakrishnan: (33:11)
Yeah, So yes, we’d love for tenants to tell their owners to sign up with us. At the end of the day, if it’s a professionally managed property, the owner has to be the one making a decision. So I’d love for tenants to sign up directly but unfortunately, very rarely can they make the final call on it. Look, at the end of the day, in this business, what you’re trying to do is trying to take care of somebody’s most valuable asset and keep it at that same quality, right? Ultimately, you want to make sure that the capital appreciates and when you’ve got somebody living in the house, the more that they appreciate living in the house and the better a job that they do taking care of it, the more likely it is that you as an owner ultimately are going to be in a good position.
Mina Radhakrishnan: (33:49)
And so I don’t think that it serves anyone in this business to treat tenants badly. I think the best way to do it is actually to treat tenants well. Have a good relationship with them, work well with them, know that they’re there for you and ultimately to make sure that the property is a good experience. And the best way to do that is to communicate regularly and make it easy to be able to record and report the issues that come up. I think one particularly challenging instance of that has been recently with COVID, right? And obviously dealing with rental reductions and doing that. And for us, I think one of the really critical parts of managing that well is, it’s not just about owners and it’s not just about tenants. It’s actually about hey, we’re all in a very difficult situation together. How do we treat this with compassion and empathy while at the same time having some objective and clear guidelines in place?
Mina Radhakrishnan: (34:36)
So we made it easy for tenants to be able to provide us with information. We did ask for specific information around, okay, what is feeding into you needing rental relief? How do we make sure that we can best position that to the owner? How do we come to an amicable solution? Because I think it’s for both parties, you have a tenant who’s having difficulty paying their rent at the end of the day, the owner’s also going to have difficulty paying their mortgage. And so we just have to balance those things and treat both sides with compassion in what is an extraordinary situation.
Kylie Davis: (35:03)
Mark Trowell: (35:03)
Kylie Davis: (35:03)
Mark Trowell: (35:08)
It’s a good one for me as well. Look, we did a lot of study on the tenant side as well. And you probably see our acquisition of Easyshare, which is a payments gateway. Now, Easyshare was already in the market, just purely serving tenants. You look at tenants and joint tenants, splitting bills, utilities, the way they manage property. Easyshare was already operational in that area. And to your very point, right? You’ve got investors and you’ve got renters and we look at renters going well, they’re more than just someone and they’re just paying the rent. You’ve got to look at the experience that a tenant has in a property. Whilst you want to make platforms great so they can raise if there’s maintenance issues, all that sort of stuff, we went one step further and went okay, look at the hotel experience, look at the build to rent experience. You’ve got a lot of build to rent coming out down here in Australia. You’ve got the likes of big developers coming up with build to rent. And what they offer is not about necessarily the landlord in place.
Mark Trowell: (35:58)
So all around, how do I create a brilliant and beautiful tenant experience? So we took a lot of that here as well and went well, how do we get to that point? Because as me just saying that, you create great tenant experience, it’s better for the landlord in the long run anyway. But it adds value to the particular property and some of that is around payments but we went one step further and started looking at the tenant’s life admin. How does a tenant live in a property? What do they do in a property? How can we then not just pay the bills for the landlord but with Easyshare, now it gives us the ability to do all of that sort of thing for the tenant. Oh, you move into a property, I’ll make this as seamless as possible, right from when you’re actually applying to the property, right the way through you going to the property and the life cycle of that property. And when you move out that property as well, you need references. So what we did is we took that whole holistic view of how someone interacts with the property and how we can make the experience of their everyday interactions within that property better. And that’s really an important part because we viewed a tenant like a hotel, as a guest. You want them to have a great experience.
Kylie Davis: (36:59)
I think that’s a really important point, isn’t it? For a long time, renters have been treated as second class citizens because they haven’t had enough money to own a property. But we’re entering a period now where generationally, a lot of people are going to be renting for a really long time. And so people are insisting on better experiences because this is their home. The fact that they’re renting it is irrelevant. It’s still their home and it’s still the place where they’re being with friends, growing families, it’s still special to them as their home for all the same reasons. So Mark, I had a question that I did actually want to direct to you and sorry, AJ, I’ve got a great one for you coming up. But obviously a couple of years ago, from coming out of Macquarie, you looked at what the future proptech was and Yabonza was the answer and what the future of property management was. What do you see is coming through in the next five years or so?
Mark Trowell: (38:02)
Look, where I see this is, I think it’s more around the bit that you focused on, investors and renters. I think there’s different ways of people owning investment properties. I think on one of your previous shows, you may have had BRICKLET on I think, fragmented property. We work closely with BRICKLET around fragmented property. And I think especially at a time like COVID, has been particularly interesting because if you can still get the leverage that you want to get as an investor and BRICKLET allows you to do that, you can put your exposure over five or six properties as opposed to spending $650,000 putting them all into one property. And then something like COVID comes along and that renter in that particular area is under stress and of course, then you’re basically all in on that.
Mark Trowell: (38:51)
But how do you diversify? So I think from a landlord’s perspective, you’ll start to look at more diversification in that area, which then really comes back to focusing on property as an investment. Which means that you’ve got to have trusted people in place from a management perspective to go, how do I view that property as getting a better return on my investment? And probably removing some of the emotional component out of it a little bit and looking at it as direct return, depends on what it is. I think that’s probably an angle that we’re going to go from an investor point of view. How are you going to get more investors in the market? I think as you said before, you’re going to get an increase of renters in the market as well, we hope. Home ownership is one thing but certainly, rentals will become a new norm. And if you look at someone’s life cycle between 18 and 40, you’re moving roughly about seven times. You’re moving, almost on average, every two years. And people don’t necessarily want to fix in themselves to a particular area.
Mark Trowell: (39:47)
So rentvesting, I think will certainly increase as well because you do love the long term exposure to property but at the same time, you want the flexibility in your own life to be able to move around. And when you looked at things and the brands that you’re moving around with, you want to go into somewhere knowing what experience you’re going to get when you get into a particular property. You look at McDonald’s, right? There’s a lot of companies in the past that have done it as well. You walk into one wherever you go around the world, you know what you’re going to get and it’s that sort of thing. I think the property management side of the business, I think will break away from the sales side of the business and it will scale a lot bigger in terms of where the sales were. I think sales will still be more localised to that. A big property management with a broader base, to be able to deliver right the way across the country. We’re still touching on obviously the local level as well but that’s how I see it going in the next five years.
Speaker 6: (40:37)
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Kylie Davis: (41:05)
And look, that’s a fascinating idea, isn’t it too? Because there’s big repercussions for the real estate business models if it untethers from property management as a whole. AJ, look, landlord direct stuff has always been a small proportion of the market. How big do you see that you could become in the space? How many landlords out there do want to do it themselves, do you reckon?
AJ Chand: (41:36)
Well, 32% of the market right now, Kylie, is the number. So 1.2 million properties that are self managing and internationally, that’s a lot bigger.
Kylie Davis: (41:44)
Is that Australia?
AJ Chand: (41:45)
Kylie Davis: (41:48)
AJ Chand: (41:49)
Yeah, so it’s a surprising fact, right? When we researched this market initially because I was a self managing landlord, the first thing I looked at, who else is in the same boat as I am in? And that was 32% of the market, 1.2 million properties. And if you’re looking at other countries, more prevalent in doing self management as opposed to property management. Australia is one of the ones that are going down the traditional property management path. For us, I think that it is growing, I think the self managed side is growing and we’ve seen numbers to say that it has been growing. The only difference is the lack of automation, the lack of technology and the lack of power that the landlord could receive from technology to do it themselves. And the reason why, especially post COVID, is going to be about maximising your rental yield. It’s going to be about squeezing every single cent that you can out of your property in order to make sure that your bills are paid.
AJ Chand: (42:47)
And doing the self managed way, in personal experience really, I’ve managed to build better relationships with my tenants. That’s before Instarent was launched because I was self managing. We were together, collectively better at looking after my asset because there was a lot more attention that I could give my own tenants than I could expect a property manager to give. So it was just the relationship side but in terms of self management, it is growing and it is growing rapidly and it’s already a pretty big enough space.
Kylie Davis: (43:19)
So question for the group, if you were a property manager listening to this panel, what would you be taking out of it? What should traditional property managers be learning from you around how they then go back to their businesses and consider changes they should be making?
Mark Trowell: (43:44)
I think what they’ve got to do is look at where they want to go as an individual. So there’s two sides-
Kylie Davis: (43:51)
Screw the industry, it’s all about them.
Mark Trowell: (43:55)
Well, you’ve got to look at, are they a real estate licensee? Because a lot of property managers aren’t licensees. They’re the ones that are sitting down there pushing the work through. They’re the ones I feel most sorry for because they’re the recipients of what the traditional world is right now. So I think what this does is, the disruptors coming in, gives them a point to step back and say what do I actually want my career to be? Where do I want my career to go? Do I want to attach myself to one of these businesses because they were certainly offering some of the services, do I want to work with them? Because that’s a way they’ve got to just rethink their careers and where they want to go as an individual. Because I think most of it starts as an individual because if it’s the property manager, as a licensee, that’s a different level.
Mark Trowell: (44:40)
They’ve got to look, well, how can I work with these disruptors? What’s most attractive to me in this business? Is it my sales side or is it my property management side? Because if you ask a lot of licensees, they tend to focus more on the sales side as opposed to property management, which tends to be more accustomed in most of these business. So what are the options there for these businesses to work with businesses like Instarent, Different, ourselves, et cetera? So I think you’ve got to look at it not as disruptors into the space but turn that around and think about, is there opportunity as me as a traditional business, to leverage this somehow?
Kylie Davis: (45:19)
So Mina, what’s your view on this? If I was a principal looking at Different, is there a way that we could work together?
Mina Radhakrishnan: (45:30)
Yeah, absolutely. We’re always investigating ways to be able to partner with agencies. Look, I think a key thing is this is a big business in Australia, right? And we definitely don’t spend our time thinking about oh, how do we beat other disruptors in this space? For us, our focus is how do you offer a singularly great experience to owners and to renters. And I think that that’s what drives everything that we do. It’s like, is this going to create a really efficient approach for our operations team to ultimately be able to make sure that the right thing gets done by the owner and by the renter? And that’s what we spend all of our time focusing on. And I think at the end of the day, that’s how you win, right? It’s like, how do you create something so great that nobody wants to leave you? That’s the most important piece of all of this.
Kylie Davis: (46:22)
So how hard has it been for you guys to get customers? How trusting have investors and landlords and tenants been with you? That’s a question we’ve had from the audience.
Mina Radhakrishnan: (46:33)
Yeah, I think with any business, when you start small, right? And you grow from there. We’ve been very fortunate to have some really great investors on our team. So I know our very first investor from back when we were nothing, my husband’s cousin, his other cousin and a friend all as our investors.
Kylie Davis: (46:54)
And when you say investors, you’re talking about property investors, we’re not talking about VC investors or money investors.
Mina Radhakrishnan: (47:01)
I am talking about VC investors.
Kylie Davis: (47:02)
Oh, okay. Right.
Mina Radhakrishnan: (47:04)
I think that the value of institutional investors is that they’ve seen a lot of these things happen before, right? In these same industries. And there’s a lot of great parallels and pitfalls to avoid that they can point out. And regardless of whether it’s property management or other industries, every small business has to start somewhere and has to grow. And there’s very common things that happen along the journey of growth, that I think institutional investors bring a great deal of insight into and can help you get around and manage that. So for us, that’s been really great to have those investors. But in addition to that, a VC investor also happens to officially be a property investor. And many of them have friends and many of them have referrals, so I think a couple of things that helped us are that we were not based in one specific geographical area, we don’t only operate in one or two suburbs. We’re all throughout the major cities in which we operate, Sydney, Melbourne and Brisbane. Now the Gold Coast and now the Central Coast as well.
Mina Radhakrishnan: (48:00)
And so as a result, what that means, just quite frankly, the number of investors is much larger because our base of operations is larger. And so as a result, I think that helps us a lot in terms of being able to reach out to more people in a broad way. And there’s a lot of different ways by which we acquire customers but obviously all in marketing is one of those things, brand, referrals. And referrals are a continual and growing base for our team because every property investor knows another property investor. And I think if you can show that you’re doing the right thing by one person, they’re much more willing to recommend you to their friends and family.
Kylie Davis: (48:36)
AJ, how have you found your market out there of landlords who want to manage their own property?
AJ Chand: (48:42)
It has been one of those changes in the perception of the market really. But ideally, we went out for the self managing landlords that are currently self managing. So the feedback has been great. Because we have digitised all the processes that the landlords were after and we’re constantly gaining feedback as to what should be developed and what functions are necessary for the landlord and the tenant to efficiently self manage. We’re getting ever closer to the end result, to the end point, where everything is how the feedback dictates it should be. From a self management perspective, it has been a welcome change because not many landlords have had technology to do this and they were doing it on an Excel sheet. Which is again, quite susceptible to problems that you could have while you’re managing your property as well.
AJ Chand: (49:35)
So yeah, the feedback has been great and also, the adoption of the technology has been quite rapid as well. And post COVID, we’ve seen the numbers that have been really good in terms of growing in the platform quite rapidly. Since we had say, Airbnb for example, that was grounded out of new sellers market, we had agents that were grounded. And what that meant was everyone was looking for a long term solution that would provide them a similar functionality that Airbnb did. And that’s a lot of properties that hit the market all at once. So it has been good growth for us.
AJ Chand: (50:14)
I think the technology adoption itself is starting to ramp up. I think a lot more people have a lot more time to start looking at how they can efficiently manage their property portfolios and how they could do things differently. So it has been a great learning for us and I think it would have been for all the other proptechs as well because COVID has brought in the technology adoption that the landlords and tenants are experiencing. And also, more of a push to find out how they can maximise the rental yield. And the second biggest expense in most cases in your property, is property management. First is your mortgage, second is your property management. So it is interesting times definitely but I think technology and automation, definitely are the way forward. Either for traditional agents or the proptech disruptors that are entering the market or are in the market.
Kylie Davis: (51:04)
So what’s the response been from principals and traditional property managers to your tech, Mark or Mina? Are they embracing it or are they going oh, it will never take off, we don’t need to worry about this.
Mark Trowell: (51:19)
It’s mixed, it’s certainly mixed. You get believers and non believers but that’s just not in this industry. You see it in all industries. Mina came out of Uber there, right? And you can see what the response was from taxi drivers around Uber. That’s a classic example, right?
Kylie Davis: (51:35)
Oh, it’ll never take off.
Mark Trowell: (51:36)
It’ll never take off. And now you see they’re the best around the world. But there is no one size fits all in terms of what brings them all there and property managers are saying some of them are believers, some of them are seeing this as a genuine way of the future, whilst others are sitting there resisting in any way they can.
Kylie Davis: (51:55)
So Mina, when you were at Uber and Google, you would’ve seen the network effects happening. What has that looked like in this space and for Different?
Mina Radhakrishnan: (52:09)
Yeah. I think for us, it falls into two areas, right? One is, as I mentioned before, it’s about data. So the more maintenance requests that we have coming through our system, the more data we’re tracking. The better we get at being able to answer the question of who’s the best electrician in the eastern suburbs of Sydney, right? And best is so much more than just cheapest, it’s fastest, fairest price, done well the first time, never needs to come back. And the more and more you do of those things, the more of those kinds of problems you solve, the better you get at being able to answer that question for anyone. And for us, that’s really the way we think about Different, is we’re not just property managers, we’re assistance for the home. If you can assistance for the home for investment properties, you can do that across all properties.
Mina Radhakrishnan: (52:53)
For example, with all this rain in Sydney, we’ve got roof leaks in our house. Guess who I got to come fix it at our house, it’s really easy. I just follow the same people who I would get to fix… The best group of fixers and anyone else in the area that we live in and I get that directly from Different… So we just get better and better at doing those kinds of things. So I think that’s one area in terms of network effects, is that you can just answer this question so much better doing the right thing to fix problems in the house. And then I think the second thing is, as our business continues to grow, we’re fortunate that we’ve seen a tonne of growth over the past few years, it’s big. And I think that that’s a wonderful thing and what that means is that’s just a larger base of owners and renters who will refer us to other owners and renters. And so I think really, word of mouth is the best possible way to get new people on board and we firmly believe that and if we can provide a great experience for our customers, then ultimately, we win.
Kylie Davis: (53:51)
And are there benefits to tenants? Are these new ecosystems that you guys are building that are completely digital, are they making it easier for tenants to prove that they are good tenants and that they are a good investment.
Mark Trowell: (54:06)
Yeah, just going back to the point before, we acquired Easyshare for that. But the benefits we see to the tenants around how do we create that brilliant experience for them? Not just getting in there and hoping they’re going to pay rent but how do we actually treat them like a guest in that property? And that’s what we’ve really done a lot of focus on as well. Obviously, there’s the repairs and maintenance, there’s all of this data we’re collecting but we’ve had data, also how do we use it to tenants’ advantage if the tenant then needs to go and take a mortgage out or they’re buying their own investment property? How can you use what they’ve been doing in terms of their rent payments? How can they use that for themselves going forward? And we collected a huge amount of data around that but ours is around well, how can we empower the person whose data it is, to actually do what they need to do? Be it taking out a mortgage or invest in property. Be it splitting their bills in a shared house and all that sort of thing.
AJ Chand: (55:05)
Kylie, just to add to that as well for tenants. Instarent, when we built it… I’ve been a landlord and a tenant in the past as well. And the things that really annoyed me about being a tenant, one, if you get rejected for a property, there’s no transparent answer as to why you got rejected. Second, applying for these properties. Going property to property and then filling out forms and doing that multiple times over is also a task that wasn’t efficient enough. So for us, it was about transparency. So tenants could come in, do their rental regimen where they’ve done all their details once and they can apply for that, apply for as many properties as they want at the back of that.
AJ Chand: (55:45)
They could connect to utilities, they can manage their payments, they can pay through the app. They get real time notifications for arrears and real time notifications to pay their rent. They can add their expenses, they can do their inspections in a virtual way, they can enter all their repair details. The reason why we did that and we brought the same level of functions to the landlord as we did to the tenant is really to make their life less intrusive to be honest. So they can do all the digital aspects of everything they need to do, it’s all tracked. We have all the data, they have all the data, all in real time. And it becomes less intrusive, so they don’t have property managers chasing them every single time, it’s all there, all overarching so you can see everything.
Kylie Davis: (56:30)
Fantastic. So look, ladies and gentlemen, thank you. We could discuss this all day, I’m sure it could actually make an entire conference but I’m afraid we’re going to have to wrap it up there. So I wanted to thank everybody. Thanks to our panellists, Mark Trowell from Yobanza, Mina Radhakrishnan from Different and AJ Chand. I think we’ve covered most of the topics that were asked in the questions and I would love to hear whether there’s anyone in the commercial space doing anything like we’ve seen on the panel today. Please reach out to us.
Kylie Davis: (57:02)
I’d also like to thank the Proptech Association board, Simon Yates, Jennifer Harrison, Marie-Anne Lampotang, AJ Chand and Kylie Doohan for their help with this event. Our next virtual event we’re getting organised now, it’s going to be on auctions and negotiation platforms. So we’ll come up with a sexier title before August but that’s pencilled in to take place on Tuesday, August 25. And the reason we’re doing that because in our proptech panel last month, Chris Rolls gave us his views on why he felt auction platforms had scalability issues. So we thought we’d better give the sector a chance to respond because there’s nothing like a good debate.
Kylie Davis: (57:40)
So a very big thank you to Stone & Chalk for getting behind the event and their support for Australian proptech. If you’re a proptech looking for a great workspace with other businesses, kicking goals across fintech and proptech, I really do encourage you to check out Stone & Chalk with their coworking space in Sydney, Adelaide and Melbourne because we can’t stay home forever. And thank you everyone for your time, thank you again to our panellists. This is Kylie Davis signing off.