Connect with Vishalsai:
Today, we have invited Vishalsai to talk about what a property manager does and how technology can help landlords and property managers.
- What is Property Management?
- Why hire property management companies?
- What are the pros and cons?
Terminology & Source:
Asset Management: Asset management is the overall process of governing an asset. It includes developing, maintaining as well as selling the asset.
Tenant Management: Tenant management service is inclusive of dealing and assisting residents with all kinds of tenancy related inquiries and procedures.
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Alright, let’s get back to the transcript of the show. Enjoy!
Darren: Hey Vish, hey, how’s it going man?
Vishal: Hey, how are you?
Darren: Very good. Very good. Just between interviews and stuff and then first of all, thanks for coming in and we’ve been longtime friends and we’ve never had this setting to interview like this so it’s kind of interesting in my perspective. First of all, would you mind telling the audience what you do and what your company does?
Vishal: Sure. So I’m Vishal Sai, founder of my property. We help landlords reduce their operating costs and basically improve their portfolio returns here in Hong Kong. What we’re trying to do is basically develop technology to help them streamline their operations. I often see a lot of the work that they do and be able to make decisions when it comes to managing their property portfolios a lot faster and more reliably.
Darren: So for people that don’t understand what property management does, would you mind telling the audience a bit more about what property management do for estate owners? It can be from basic scope and it can be from different asset classes too and stuff like that.
Vishal: Okay, so when it comes to property management, it can actually be divided into two main segments. So there is asset management, which covers common areas within buildings, and it’s usually applicable to people that own large estates. In the context of asset management, you tend to get involved with tasks such as repairing elevators, hiring security guards, fixing comp areas, building infrastructure and all that. The other aspect of property management is more on the tenant management side of things. So this involves more private areas within buildings. Tenant management companies are more involved in collecting rent from tenants, finding new tenants, handling repairs or appliance repairs within an apartment and more that sort of thing. So like going back to it under property management, there’s asset management and tenant management. Our business is actually more focused on the tenant management side of things. So we are targeting large landlords in Hong Kong that have several different units. They can be in the same building or they can be in different buildings scattered across Hong Kong. But what we do is we help them streamline their management with the tenants that they have in their various studios.
Darren: I see. But it sounds like these are things that landlords could do themselves. They could hire a team. They could do everything in-house. So why would a landlord or a state owner would hire you or other companies? And what’s the pros and cons behind that?
Vishal: So in terms of hiring property management companies, there are several companies that provide these tenant management services. And in terms of the pros, it’s quite obvious why you would hire a company like that. It’s because they’re professional. They provide a complete hassle free experience so they will handle everything. You even won’t have to deal with anything. You just get reports say every month. And the fact that they are experienced and professional means that, you know, everything will be handled in, I guess, a more formalized or correct manner, so to speak. However, there are several cons with going with an outsourced company as well. They tend to be fairly expensive for more experience. So property management companies or well tenant management companies in Hong Kong, they tend to charge between three to seven percent of the monthly rental, which is quite significant, especially if you own a sizable portfolio. These companies also provide a delayed cash flow. So if you’re managing a large portfolio, the cash flow is very important. And what they do is when they collect rent for a specific month, they typically only deposit those returns one month later after they’ve paid any management fees, government rent and so on and so forth. So if you become a large portfolio holder or medium sized portfolio holder, this could have significant effects on your cash flow. I think the last thing that I guess we have seen is that whenever you outsource your work to a different company, there may arise a conflict of interests. So if you use an external company, they will in turn use their own in-house staff for handling repairs or they will use their own internal property agents for handling renting out your properties. But this does not necessarily mean that you will get the best price for your repairs or it doesn’t necessarily mean that you will transact your property the fastest. I actually – many medium sized landlords end up hiring their own staff to use – to kind of manage their own personal portfolio. So imagine your landlord that owns around 20 units. Let’s say, for example, you’ll just hire one person full time, maybe a couple people, part time work, whatever it is to keep track of things via Excel, via word documents, manage your own files, but handle all of these things for you. So that is a very common structure that a lot of medium-sized landlords follow. However, the people that they hire don’t necessarily operate very efficiently. They don’t necessarily have industry experience. They don’t have economies of scale that you get for managing a large portfolio. And that’s where we see that’s where we kind of come in, where we help people in-house that are already managing property portfolios digitize and automate a lot of the work that they have to do, which in turn can help landlord downsize their team, reduce errors that happen, rent out properties faster and so on.
Darren: So if a landlord chooses to be self managing by themselves, what kind of tips as a property management professional like yourself, what kind of mistakes, debts landlords might make and what kind of tips would you have to help them make it better?
Vishal: So in terms of it, you mean if they’re managing it themselves right?
Vishal: So I think a lot of people that tend to manage their portfolios themselves tend to follow a very reactive process. So what we’ll do is if a tenant notifies them that they’ll be moving out, only after the process, will they go about finding which property agents that they should reach out to; what is the square footage of their apartment? What is the market price for similar units, even in terms of repairs? So whenever a repair request comes in, they will react and try to find out what are the necessary things that need to be done. One of the things that we feel that landlords should in fact do is take a more proactive approach, which is being more regularly well read about the status of their portfolio because a lot of the times you can actually tell when tenant is going to move out based off their payment schedules in the months prior or based off how many months outstanding payments there are. You can actually immediately get a sense of how you should be handling that tenant. Another thing that I think in Hong Kong is not very common is that they underestimate the cost of churning your tenants. Every time you find a new tenant, you may deal with various vacant periods. You have to pay agent commissions. The need to repair certain things increases. So there is a significant cost every time you have to find a new tenant. And a lot of the times landlords don’t necessarily factor that in and so they might be providing a very negative experience for their tenants throughout by not responding to their requests quickly, by not being responsive, by not openly communicating with their tenants on a regular basis, which means that the churn that happens within their portfolio is higher and these are subtle costs but you can have a huge impact on the portfolio that landlords have overall.
Darren:I think from the way you talk about it, I think that’s why people have to hire an outside property management firm is because there’s so many things that are so particular, detail oriented, and you have to always be in touch with the market to know what’s going on and the landlord might just might not have the time to do everything.
Vishal: That’s why people use property management companies. What, like I mentioned earlier, is that when you go to external parties, there tends to be a slight conflict of interest on certain things. And also they tend to be pretty expensive in Hong Kong, which is why you have a sizable enough portfolio, say ten, fifteen or up, you would likely hire your own team to do that for you.
Darren: I see. So obviously we both know each other long enough as I said before I know that you would provide, you focus more on the property management platform over the surface. What type of clients do you have when it comes to the platform? And why would they need your platform? What would they get from it?
Vishal: So the type of clients that we’re targeting are high net worth individuals, families, family offices, even small real estate firms in Hong Kong. So we’re targeting people that have between usually upwards of 10, maybe 15 to about a hundred properties under management in Hong Kong. A lot of these people tend to have their own stuff. As I said, managing their own portfolio and where we come in is that by helping them streamline a lot of the work that needs to be done and automating various things, they can potentially reduce their operating costs by downsizing team, reducing the number of errors that happen and promoting transparency within the organization so that if any issue does happen, multiple people can address those issues very quickly, being able to act on their property portfolios. So we’re basically trying to help these teams operate at a level even greater than property management companies. By helping them automate and basically digitize a lot of the work that needs to be done.
Darren: I see. So just wonder what kind of features or things that your product has, your platform has. And on top of that, what kind of property management service do you think can be automated? Because like, you know, I used to work in a real estate fund and then sometimes when I engage with property management, in my head, I was like, “I shouldn’t pay him that much because I can automate it with some tools out there.” I just want to know your point of view on that.
Vishal: So I guess I’ll start off with some of the features that we’ve implemented and certain other things that we feel can be automated. So starting with something simple, we help them with generating their invoices, their receipts. Any payment reminder to their tenants. Keeping track of any repair tasks that need to be done, such as, say, you have an issue with your washing machine you want us to keep photos of before and after state. Log any phone numbers of people that you’re calling. So a place to log all of this kind of information. Another thing that people need is just being able to access their documents electronically. So a quick retrieval of data. We help them with that, because a lot of the times landlords don’t necessarily have say a history of your tenancies or they don’t have the floor plan when they need it or appliance warranties. So what we do is we help them digitize all of this information so that they can access it very quickly. So some other features that we have is actually like helping them contact property agents. So, again, going back to the workflow that landlords have, what they would do is when they have a property this weekend, they’ll walk down to the nearest centerline or midlane talked to a couple of agents, maybe reach out to some agents that they’ve worked with before. Well, what we do is immediately through the platform, you can press one button and send it out to all these agents, which we have helped filter and we have helped filter and get this information out efficiently.
Vishal: Yeah. So those are a couple of the features that the platform has. And also in terms of reporting, a lot of the times at the end of every month, you want a report on how your portfolio is doing. What the occupancy rates are like? What is your net spend or net cash flow position for the property portfolio and be able to assess that. So even in terms of generating these reports for your entire portfolio, a lot of this work can also be automated because all you have to do is now input the data and you let the system generate those reports for you.
Darren: I see. So like, you know, we’re in 2020 now. I just don’t get it. Like, why is property management port as a new thing? Because I thought these are things that would be around years ago right. I mean, you know, you can find, you can buy cars now online. A property management sounds like a thing that should be around for ten years already. So I just want to know, like, what’s the reason behind that? Why is this thing a new thing for 2020?
Vishal: So to be honest, property management platforms are not a new thing. It has been around like there are various tools for very large corporations, meaning people that manage several buildings in Hong Kong. So there are several tools for people in that market segment already. There’s just not many tools for people in the middle to mass market segments. The second thing is that there are property management platforms in the US, in the UK, in Australia and so on. But Hong Kong as a city is just very far behind technology wise. So a lot of things that are new in Hong Kong have perhaps been around for a while in other places as well. So what I would say is this might be a new platform in Hong Kong, but there are other property management companies existing in other countries. The last thing is that I think in this particular space, Hong Kong is a very unique market because there are buildings, there is relatively transparent data. There are a lot of landlords that own quite a lot of different units in Hong Kong. And there’s a lot of wealth stored here in real estate. In countries like the UK or the US, the number of landlords that own large portfolios as a percentage is a lot less of the population than it is here.
Darren:True, I get it yeah.
Vishal: It makes it a very prime product for the Hong Kong market.
Darren: I see. So, like because I know your tech background and so when you create the products right, is there something that you create that’s different because the audience here is different. Like I’m sure Americans have a different way of their UI and stuff like, but for your point of view right do you design differently or is it only because the target market is different?
Vishal: So the product is different because of the different market. So, like I said in Hong Kong, because one of the big differences is that there’s a concept of dual agency. So sometimes an agent might be working for the landlord. Another agent might be working for the tenant when leasing a property or an agent can actually work for both the landlord and tenant. So there’s a concept of that which is different in Hong Kong compared to a lot of other countries in the world. Also, the sheer volume of data homogenous data is present in Hong Kong because everything is highrises, it becomes a lot easier to create an equivalency between different units in the same building. And there’s a large volume where transaction is. However, in the US or the U.K., a lot of the homes are very heterogeneous, which makes it very difficult to actually compare like for like. So that’s another factor where in Hong Kong, when you read comparables, it’s being able to aggregate all these external data points and to display it is a lot more equal here than it is in other countries.
Darren: I see, that’s a very point because I’ve never thought of it that way. It’s just something that, you know, like you never think about like, “Hey, real estate can be more really similar to all people. But down to it it’s like people, even different landlords, different locations have different behavior.” So I have one last thing that I just want to know more right, because it seems like, you know, U.S. and European tend to be more open minded with tech. And I’m sure a lot of landlords, we both talked about this before a couple times is that people are just starting to get used to tech and start understanding tech. So what kind of challenges do you have when you’re pitching to a homeowner and landlords about your portal?
Vishal: Well, one of the big challenges is that with landlords, usually the larger the land, the larger landlords tend to be relatively older because they have, I guess, established their portfolio over several decades. And usually the older people are, the less likely they are willing to adopt new technologies. So this is very clear, because when we see sometimes the landlord or say in the case of families, the top generation having to make a decision about technology, they tend to be relatively averse to change, whereas people under the age under 55, for example, tend to immediately just get the value proposition, get the benefits, and a lot more willing to get started with it. So I think that’s one big factor. Another thing is that it’s also a cultural aspect. So many landlords in Hong Kong have been able to make money because the Hong Kong market has just appreciated significantly over the last couple decades. It’s not necessarily due to over optimization of how they manage their property portfolio. It’s kind of Hong Kong has been a growing market and that has been able to facilitate their growth in their portfolio. So I think that’s another. Another challenge to get across to landlords is that just because they’ve been doing it for 20 to 30 years doesn’t mean that they’re doing it in a very efficient manner or an optimal manner. So I would say those are the couple of things that are challenges when speaking to potential landlords.
Darren: Yeah, I’m sure it must be right. So, like, what kind of take away would the audience like you want the audience to have? And maybe are there any last words you have for the Hong Kong landlords.
Vishal: So I guess the biggest takeaways is that there is significant disruption in the space. And usually when you look at it from an outside perspective, there are a lot of ways to streamline or digitize a lot of the work that is being done. And you can actually downsize their staff and reduce the number of errors that you’re having, it can go a long way in terms of boosting your portfolio value and yeah, it’s something that should be looked at.
Darren: So if you want to put a number, kind of like an idea to people right, how much time and effort do you think or even how much less labor they would need for a landlord if they have your product, for example?
Vishal: So from the clients that we worked with, we’ve been able to improve the time spent on various tasks by between 50 to 60 percent which means that there’s a good chance you can reduce your staff by 50 percent or even more. And in the case of some landlords they may not necessarily want to reduce their staff down, but you can reallocate the staff for various other work that needs to be completed within your organization as well. So we’ve seen quite a significant amount of time saving just by streamlining a lot of their work. And yeah, there’s a variety of ways to actually get this efficiency goods.
Darren: That’s great. I think that’s something that is a very powerful message to people in Hong Kong to understand more about what’s out there and not even in Hong Kong, anywhere around the world. And is was your product only available in Hong Kong or you’re planning to go worldwide?
Vishal: So at the moment, it’s only available in Hong Kong. We think maybe in about a year or so we would look at some overseas markets as well. But at the moment, we’re focused on the Hong Kong space.
Darren: I see. So if all the audience wants to find out, find you and talk to you more, what are the ways that people can know more about your surface and product?
Vishal: Well, they can just email firstname.lastname@example.org. You can also WhatsApp me. You can add my WhatsApp into the description of the video.
Darren: You sure you want to put your WhatsApp out there? Everyone’s going to spam you.
Vishal: Well, we have a company WhatsApp so I’ll give you the Company WhatsApp number. So yeah. So either my WhatsApp or E-mail address. You can just reach out. You can also message on social media. But I would say e-mail or WhatsApp is probably your best bets.
Darren: Yeah, I’ll put everything in the show notes. And I think this is pretty good because not only for people that is learning about property management, it’s for people that want to understand what is a property management toolist, because like sometimes I tell people about your product and people are like, what does that even mean like what is there? So thanks for your time because, you know, like, I actually kind of want to do another episode with more property management. So I hope that you can join us next time.
Vishal: Okay, sure.
Darren: All right. Thanks for coming in and I’ll talk to you next time then.
Vishal: All right, awesome, talk to you later Darren. Take care bye.
Darren: Talk to you later man, thanks. Okay bye.
That’s all for today. See you later!