A recent poll conducted by Smart Property Investment – a platform for investors and property buyers – has found that almost 70 per cent of landlords want to receive rent immediately from their tenants or to have the flexibility to choose when they are paid.
Just 25 per cent indicated they preferred to receive rent at the end of each month regardless of when rent was paid by the tenant.
Only 5 percent of property investors were happy receiving rent two weeks after it had been paid by tenants.
Mitchell Burge, an investor with a portfolio of 18 residential properties and two commercial assets, believed investors that have to wait for their rental income while it sat in an agency trust account were getting a raw deal.
“I want my rental income in my bank account as soon as it’s paid,” said Burge.
“With different mortgage repayments going out every month, and at different days, I want the biggest balance in my account I can possibly have at all times.
“I use an offset account to help reduce interest payments, so every dollar in my offset is working for me. Every day that my funds are sitting in someone else’s account, it’s benefiting them, not me.”
Burge said he used property managers to manage his portfolio because he didn’t want to get dragged into the day-to-day headaches of directly dealing with tenants.
“The only complaint I have is the lag between when rent is paid and when I see it in my account,” he said.
The poll’s findings highlight a potential gap in the proposition of many agencies and property management businesses due to the largely manual process of collecting, reconciling, and distributing rent via a trust account.
While this process has served the industry well for decades, the emergence of new technology and the evolution in payments has opened alternatives.
Managed App pioneered a new breed of platform in 2018 based around fully automated direct and instant payments as an alternative to the trust accounting software the property management industry has used for the last 30 years.
Several new players such as Kolmeo have also recently entered the market, highlighting the growing demand for new technology to keep pace with landlord expectations.
Managed App head of sales Matthew Wilson believes that when it comes to growing a rent roll, one of an agency’s biggest advantages is offering landlords the control they want when it comes to receiving rental income.
“Every agency bases their proposition to landlords around their great service, experience in the market, and their fantastic team. While this may well be right, if every agency in the area promises the same thing, it’s not really an advantage,” he said.
Wilson said landlords want control over when they are paid their rent.
“Imagine how powerful it is for an agency when they are talking to an investor about managing their property, or switching from one manager to another, to offer this choice about when they receive rental payments. It’s a no brainer,” he said.
“We live in an age where we expect things instantly. Whether it’s buy-now-pay-later or the immediacy of internet shopping, technology can now power completely different consumer experiences and outcomes.
“We barely even handle cash that much these days. When two agencies talk to the same landlord, it’s clear that the one with instant and direct payments has a big head start.”