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A bold decision to leave the traditional trust account for pioneering new payments technology helped enable this prominent Melbourne agency achieve the incredible feat of quadrupling its rent roll to hit 1,300 properties under management.
When LJ Hooker Hampton Park general manager and agent, Alistair Shearer, was appointed to his role six years ago, he set his sights on scaling the business, building on the 350 properties already in its rent roll.
However, he realised that to achieve rapid growth, new systems and processes would be essential to streamline efficiencies and eliminate multiple manual tasks that were slowing down the business. With a clear idea of the aspects of property management that were stifling growth he identified that technology could be the deciding factor to help fulfil his vision.
Shearer explained to REB that at 350 properties, the agency was a “traditional” property management office that had a leasing consultant and a property manager running end-to-end operations.
It was also using a traditional trust accounting platform, which Shearer recognised had many limitations. The key for growth seemed to lie in a solution around removing the trust account and therefore eradicating much of the unnecessary manual workload that hampered his team.
“It was very old-school with how it was set up as a business, even to the point where we used to take cash and cheques back then in the office,” Shearer said.
“Reception was having to deal with multiple people coming in to pay their rent. Despite being a small rent roll at the time, it was chewing up lots of time and resources. Then we had to go and bank it and account for it.”
Using tech to drive growth
Shearer knew that he and his team had to make drastic changes, such as moving away from the archaic trust account, to grow the business and achieve scale.
He took advantage of the flexibility offered by LJ Hooker to use any independent software he wanted to drive efficiencies. After researching the market for options, he chose industry-first automated payments platform Managed four years ago.
“I didn’t want to just move us from a desktop software trust account system to a cloud version of that. I knew there had to be more to it,” Shearer insisted.
“When I came across Managed, I tested it first on one of our smaller acquisitions of around 100 properties. A few months later, we brought the remaining 250 properties across to the platform.”
By using the automated payments platform and streamlining efficiencies, LJ Hooker Hampton Park was able to grow its rent roll to 1,300 properties through organic growth and acquisitions.
“The software was instrumental to the growth because if we hadn’t had achieved those efficiencies, we couldn’t have scaled up from 350 properties to where we are now. It would’ve been a mess,” Shearer said.
Switching to an automated payment platform eliminated multiple laborious tasks for Shearer, including producing daily receipts, having manual disbursements twice a week to landlords and tradies, and undertaking end-of-the-month reconciliations.
“I can only imagine how inefficient it would be if I’m running 1,300 properties and receiving payments and all the additional old-school trust accounting processes. Trying to run a massive rent roll would be resource-intensive,” he said.
“It leaves more room for error. You’d have to hire more staff. Not to mention, if your trust accountant goes on annual leave, someone has to cover for them.”
Since switching to an automated payments platform, owners receive rent from their tenants instantly without delays, Shearer said.
This has helped the agency lease properties, collect deposits, and move tenants into properties quickly, which is reducing its vacancy rates, he highlighted.
“Whereas in the past, you had to wait for a cheque to clear in three to five business days, which wasted so much time,” Shearer said.
Less admin, stronger relationships
Moving to an automated payments platform has also seen a shift in the role of property managers from completing administrative tasks to focusing on building relationships.
“It gives our landlords reassurance that their property is being managed by a professional who is going to be very responsive when the rent is late. There are no excuses because it’s an instant payments platform,” Shearer said.
“We’ve got very good communication with our owners through the Managed messaging feature. If the tenant goes into arrears, we speak to them instantly about it. We can inform the owners so they’re well in front of what’s happening throughout the whole process.”
Shearer also pointed out that not all traditional property managers may have the skill to manage trust accounts.
“It’s a skill set that’s not really needed now when you have a software that takes care of that. Property managers can spend more time building relationships and less time doing the accounting and admin,” he concluded.
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