A PROPERTY MANAGEMENT STORY YOU NEED TO HEAR

Can anyone remember when you had to receipt each and every rental payment individually, and one mistake threw your entire reconciliation out the window, potentially taking hours? Or if your attention deficit is like mine, it could take days to rectify. Then along came banking programs like DEFT, where you could bulk upload all the rental payments. Well, now the game has changed even more. What if I told you that you could scrap your entire trust accounting process and replace it with new software? Startup businesses are a game changer.

To begin, I must admit that I am not particularly technologically savvy; however, I am a naturally curious individual, and I am naturally curious about anything and everything that will make running my business easier, more efficient, cost-effective, and streamline. An important thing for me is also having transparency—no more covering things up. So, I’m constantly on the lookout for new technology and software solutions. A few of my coaching clients recently brought to my attention a new prop tech company called Managed App, and they provide a solution to the need for trust accounting. And like many new innovations, there are still a few things to be ironed out, but I highly recommend that you take a look at it.

Keep reading my interview with Matthew Wilson; he has a story you’ll want to hear. He’s a former property manager who spent years in the trenches. He’s also overcome a terrible medical diagnosis that turned his life upside down. Now he’s the head of sales and a partner at Managed App. But it’s not just your average property management software, and though they’ve been pioneers in developing a solution for businesses needing to have a trust account, their payment gateway is an absolute game changer. No more disbursements until the end of the month. And if this sounds too good to be true, well, you better stay tuned.

 

HOW DID YOU GET STARTED IN PROPERTY MANAGEMENT?

‘Absolutely. Okay. And, look, thank you so much for having me today. So, my background: I was a property manager myself for seven and a half years. It’s an interesting story about how I ended up in the prop-tech industry. So, during my time there, I sort of worked from the bottom up. I started as a real estate receptionist, you know, then went on to become a property officer, property manager, senior property manager, etc. And during my time, I was thankfully caught very, very early. But I was diagnosed with testicular cancer and looked again; it was caught very early, which was great, and I was quite young. So, quick recovery. But a couple of years later in my career, I had a tenant that I would say I had a very close professional relationship with. And this tenant was a BDM for a very successful firm, essentially like an engineering firm. I used to work in the eastern suburbs of Sydney. So we’re talking about very high-end real estate, like $4,000 per week. So, the owner of this property wanted a premium rent. The story with this guy was that he worked on commission only, but we’re talking deals where his commission was, you know, hundreds of thousands to millions of dollars. And he just closed a deal for $250,000. I think it was a small deal for him. And then his big deal that was just about to come through was worth $5 million. And his plan was always to retire. Pay the money, move to the south coast, and retire with his family.”

As a result, he needed a place to stay for six months. He moved into this particular property that I had advertised. In his first month, his daughter-in-law got brain cancer. Essentially, what happened was that he, as you would expect, invested all his money into trying to save his daughter-in-law. And, as someone, again, brain cancer’s not testicular cancer, but I think for me personally, that operation was, you know, tens of thousands of dollars that I had to pay. So, I can completely appreciate, on his end, the hundreds of thousands of dollars that had to go into, you know, specialists and trying to save her, so he spoke to me. He said, “Look, here’s the situation: I’m putting that money into that, and I’m going to be in arrears.” He sent me through this classified paperwork that I wasn’t meant to see, but essentially, that was the proof to say, “Here’s to show you when I’m going to get paid these millions of dollars.” And what I’m going to do is essentially pay back the rent that’s owed and pay it forward to the end of the lease. And, look, the owner was always aware that he would be leaving after six months.

“I was very surprised when I spoke to the owner, and, you know, I thought you’ve got paperwork; it’s going to be fine.” She was a very successful owner, and I just said to her, “Look, this is the situation,” and presented the facts to her. And she said, “Look, no, kick him out.” I want him off my property. And I was—I’m not going to lie—taken back. I was a bit shocked. I didn’t know what to say. I think I just sat there and said, “Okay.” And I hung up the phone, and I had to process what I was processing. I called the tenant back and I said, “Look, this is the situation.” I need to do things by the book. These arrears notes will have to be given to you. Explain to him what he can do on his end. And I believe I called this owner the next day, and look, we’re talking thousands of dollars to her, not a penny.It was not like she needed the money. And I remember asking her, and I said, “Look, what’s the reason why, you know, he’s provided his paperwork, showing that he’s going to pay the rent and forward pay?” And remember, she said it was a pride thing. No one owes me money. That’s how I am, and that’s how I’ve always been. And, for me personally, no one owes me anything. So, it’s not about the money; it’s about my pride and how I do business. So, time passed, I followed all of the rules, and, of course, I gave a 14- or 15-day notice of termination. And you know, you must go through with it and go to the tribunal hearing. And I think this was a really sobering moment for my career. And, in retrospect, I’ll explain why, but I didn’t realise it at the time as much as I do now.But we went into the tribunal case, and, you know, any property manager that’s gone through the tribunal can, I’m sure, appreciate this in any way, shape, or form. They must have had to do it. You go to that mediation, and essentially, that mediation hearing is you and your tenant or whoever you’re taking to the tribunal in these tiny little rooms together. There’s a guy that walks around, kind of making sure that people aren’t, you know, in heated arguments. And I remember sitting there, and I almost wanted him to get slightly agitated or angry because obviously you’d sort of mirror that response. and he didn’t. And I told him the situation and what the owner told me. Oh, and I almost forgot to mention that the owner called me at 2:00 a.m. the morning before the tribunal hearing. I think she was skiing in the south of France and said, “No, I want him out; let’s go.” So, I explained that to the tenant. And I remember him saying to me, “I know that this is not your decision, and I’m sorry that I had to personally put you through this.” And that was hard to hear because he also had other children. You know, I was essentially evicting someone from their property. We went into the actual tribunal hearing, and I sat there and couldn’t speak. I told the tenant my story about, you know, my early cancer scares, so I could understand and appreciate where he came from. having I think it broke me. I remember crying to get out of the hearing. I went to the restroom, drank a few, then composed myself and walked back like a judge. I was walking around, sort of just in mediationspeak, and someone had to say, “On my behalf,” and “Look,” this is not the agent’s decision. But again, because everything was done by the book, there was nothing that the tenant could do. As an example, he was in arrears and had completed the course.So, out of favor, the member ruled in my favor, and, you know, I had to kick this guy out of his And, in retrospect, that was a big, big, sort of sobering moment for me. home. That’s what happened in the suburbs after that. I was a younger guy living in the eastern part of Sydney. I think ego played a big part in that. So I knew right then and there that I had lost interest in my job. I lived outside of the house as well. I didn’t want to go backwards. But I also didn’t want to go and take two And what happened, especially again, is something that any property manager can completely relate to. three steps. So, I stayed in it six months too long. Once you’ve lost interest and aren’t giving it your all, it’s like when you leave something and it just snowballs. And I began to resent my landlords, my tenants, and what I had to do every day, which resulted in sleepless nights. Property management is one of those things where things snowball very quickly. later, And then, basically, for six months, I had a few other offers to go into sales, but I wasn’t sure if I wanted to do that. And I began to have “oh, those gut-wrenching night feelings,” thinking, “I’m going to have sleepless nights, and this isn’t going to be good.” And then I decided that was the end of it. I started going out again on Friday nights and drinking to sort of de-stress. And, well, life is more important than your ego. myself from just going to bed. It sounds horrible, but this is essentially what I was going through. And then I decided that was the end of it. I’m going to resign. And, well, life is more important than your ego. Put it aside; go and work a job where you don’t need to think, and you can reset. And funny enough, that day I kept getting a missed call on my phone, and we were playing a little bit of phone tag; I didn’t know the number, I got a few missed calls, I called back and left messages, and I gave my resignation letter. That night, there was a recruiter for a prop tech company, and they were looking for an account manager in New South Wales to essentially manage their current clients. And they were sort of shifting from this server base to this cloud-based solution. I remember the recruiter saying, “Is that something you’re interested in?” And I said, “Well, funny enough, I’ve actually just resigned from my job.” And that is how I moved from being a property manager into the world of PropTech.

 

HOW DOES MANAGED AP PROVIDE SOLUTIONS FOR PROPERTY MANAGEMENT?

To give you a quick elevator pitch on what Managed App is, it is an end-to-end property management software solution. So you’ve got your property tree; essentially, it does what it does for the majority of your audience. But one of the biggest points of difference is that, through the management of that platform, it essentially eliminates the need to run or operate a trust account. And there are some huge efficiencies, I suppose, on both sides of the coin. One is obviously internal to the business, reducing the risk of error, theft, and mistakes over time. But on the other side, like from the landlord’s perspective, it does offer some unique offerings. For example, a landlord can receive their rent immediately rather than in the middle of the month, at the end of the month, or when that agency’s disbursement run occurs. And landlords can choose other payment methods to pay their outgoings, so they can elect to pay those out of rent, credit card, or, you know, direct debit. And they’re always getting accurate end-of-month and end-of-year financial statements.

“I think for me personally, as someone who went through it and came out the other side in a bad way, property management is something I’m incredibly passionate about and something I really care about.” You know, it’s an industry I enjoyed; I loved the business development side. You know the property space in Australia, from a dollar value perspective, is worth more than the Australian Stock Exchange. It’s a trillion-dollar industry. So, if I can play my small part in helping property managers in the industry reduce some of the admin in their day because a lot of these guys are overworked, potentially underpaid, underresourced, and undertrained, if I can remove some of the admin just to make their day easier for me personally, that’s what excites me. One of the reasons I’ve essentially aligned myself with the organisation in charge of that platform is because of this. If you look at why an owner engages the services of a property manager, it’s because of things like their relationship with their customers or their market knowledge. It’s not a trust account. And I’m not taking anything away from what a trust accountant does, but I would challenge, and I’ve spoken to thousands of agencies in my time, and I’ve never heard one agency say, “I picked up that new business because that owner showed me because my daily receipting was excellent or my reconciliation was excellent.” It’s not a reason why an owner would choose an agency. On the other hand, if there was a mistake in that world, you know, you could lose management.

 

HOW DOES TRUST ACCOUNTING WORK?

What I could do is compare how it appears in the Manage that platform to how it appears in a traditional trust account space. So let’s just take a round number of, say, 300 properties. Now, in the traditional trust accounting world, 300 managements essentially means you have 300 tenants, and each one of those tenants needs to pay their rent. And of course, those funds need to sit somewhere. And what that looks like in a traditional trust account setup is that all of those funds essentially trickle and pull into one big bank account, which of course is the agency’s trust account. That agency then has the responsibility of getting that big lump sum of funds and essentially receipting that to the property and disbursing that out to their landlords, their creditors, agency fees, and whatnot. And of course, in that traditional setup, there are, you know, up to 15 manual touchpoints. Although each of these touchpoints lasts only a few seconds, there are 15 per month. What it looks like in a managed app is that it completely automates that. And how it does that, again reflecting back with a number like 300, is essentially what happens in the managed app platform: each property has a bank account attached to it. So, it’s not a trust accounting solution; it’s a payment gateway. So, it’s a lot more sophisticated with the automation and smart wallets and whatnot. But if I’m a tenant and I pay my rent, instead of that rent sitting in a big trust account, it actually goes into that property’s bank account, which we call a “wallet,” which is very similar to Pay Pal, where those funds are held. And then from there, it’ll sit in that property’s wallet. Of course, if there are any bills or anything due, it will take those funds out of that property’s wallet and pay those bills. And then, essentially, from there, a landlord can go and automatically receive those funds when they choose. It could be done instantly or at the end of the month, and it simply takes the money from the property’s wallet and deposits it directly into the landlord’s bank account.

“One thing we are noticing is a lot of landlords, because again, you have the ability to essentially choose when you want to get paid, but a lot of those landlords who traditionally didn’t see their rental income at the end of the month are actually starting to shift to instant payments because they have an offset account attached to their mortgage.” So having that money and an offset account obviously helps reduce those interest rate rises. But on the other side, which is very interesting, landlords are now again, like prior to a lot of these month-on-month interest rate rises, electing for their bills to be paid out of rental income, which again is pretty standard across the industry. But we’re finding that many landlords, including myself, want all of the rental income to go directly into the mortgage. So, a lot of landlords are actually now electing to pay their outgoings through credit cards or by having them directly debited from their bank accounts and not using their rental income to pay those bills. And again, this is something that, in the traditional trust accounting world, you actually can’t do. Whereas in managing as a landlord, all you need to do is put your credit card details in; it’s all obviously secure with two-factor authentication and whatnot, but as soon as that’s in, I can choose to pay my outgoings with whatever payment method I want, and I’m always getting accurate end of month and end of financial year statements.’

 

IS IT COMPLIANT?

I’ll go through what those legalities look like, but even for us as a business, we’ve had some huge milestones, particularly over the last six months. So, we are the preferred property management software solution for the Century 21 Network. We are an alliance partner, and to my knowledge, the only property management software solution that has an alliance partnership with the One Agency Network, and we are the preferred property management software solution for the Real Estate Institute of Australia. We’ve transacted $1.5 billion worth of property management funds through the platform. And I don’t say this to brag, but the point is that if this wasn’t legal, we wouldn’t have come close to reaching the milestones we have. On the legality side, it’s actually quite simple. What it looks like with a trust account and with an agency setup is that if an agency holds funds on behalf of their clients, that could be 50 cents for 30 seconds or a million dollars for 30 days. It doesn’t matter if they’re holding their client’s funds; those funds legally do need to sit in a rental trust account. The Managed App differs in that it serves as a payment gateway between landlords and tenants. So, the real estate agencies are actually not holding those funds anymore. And, to compare apples to apples, there are plenty of sales agents out there who are running and operating their sales businesses without a rental trust account because they put those sales deposits in, say, a conveyancers trust account, and they are perfectly legal to do so. When it comes to a trust account audit and asking about a trust account, the response is simple: I don’t hold my client’s funds. It’s exactly the same process with the managed app platform.

 

NEW DEVELOPMENTS IN THE TECH PIPELINE

It’s a fine line to walk when working on a tech platform, especially in the prop tech space, because you have to satisfy the customer’s needs today while also trying to future-proof your platform. As a business, obviously, payments and the removal of the trust account are quite innovative. We were the pioneers in that space, but we do have a few other really cool solutions on the platform as well. For example, now that we’ve just launched for a couple of weeks, you can actually borrow microloans through the platform. So say, for example, that I’m a landlord, and I’ve had a tenant in my property for 10 years, and it needs renovations, and I didn’t expect the tenant to move. And, you know, the managing agent’s gone to me and said, “Listen, if you want us to relet this at the same price or a higher price, you’re going to have to invest $15,000 into new carpet and new paint,” and I’m a landlord sitting there going, “Well, I don’t have those funds.” I can literally log into my portal, fill out a form through one of our credited providers, and borrow against my rental income within 24 hours. The system is designed to take that out automatically, week after week or month after month. We’ve got a whole bunch of others that we’re looking at releasing down the road. But, at the end of the day, I think what we’re really trying to achieve is to shift that sort of receptive sort of meat in the middle of the sandwich property management role into a lot more of an investment manager role, and being able to provide the tools to help get your landlords the best results on their investment and being able to, essentially, provide the tools to provide the tools to provide the tools. So, you can go to your landlord and say, “Hey, borrow this; you know, it’s all tax deductible, not going to affect you anyway, and you are going to get x amount of dollars back in return.”

If your trust accounting is weighing you down, this very well could be the solution you are looking for to give you back more time, money, and stress. If you’d like to learn more about Managed App, visit the link and schedule a free demo here.