Yabonza

Hi Property Chat,

Has anyone had any experience with Yabonza property management? They charge one management fee of 3.9% and are a national service that is more of a technology platform. You will have a dedicated 'asset' manager and by the looks have a network of professionals when needed to shoe the property, conduct routine inspections, organise maintenance etc.

yabonza : How we work - Smart Property Management

Keen to hear your thoughts!
R

 

Anybody remember Run Property? It was similar.
I don't think there is a yet a substitute for a local, switched-on property manager with a modest property load. Even at twice the management fee.

 

These people live in a dream land, it's actually amusing reading through their stuff and seeing all the holes and pit falls.

 

Don't forget asset management hq

Same model

Bankrupt

Lots of unhappy customers with arrears

Absolutely ridiculous model

 

How we enforce on-time payments
Unlike traditional agencies, yabonza proactively manages the payments of rent. We understand the importance of timely payments so, our platform automatically sends upcoming rental and arrears notifications informed by state-based legislation, plus your dedicated Asset Manager is on hand to liaise directly with the tenants should the need arise.

I have yet to come across one decent pm who doesn't do all of this,

 

As an investor, I prefer to have other successful investors as my property manager in each state. That is what adds value to my portfolio.

 

Yep, the fact is nobody but the Tenant can control when they actually physically pay their rent. A Lessor/Agent can only send reminders, issue breach notices, follow through with an eviction then make an insurance claim/sue for compensation thereafter. Unless you've got Ray Donovan working for you, no one but the Tenant themselves is compelling them to actually pay their rent..

And rental reference checking/due-diligence etc, I've had absolutely perfect applications turn out to be the worst Tenants, you're dealing with people and 'life happens' sometimes unfortunately. Lessors need to get comfortable with the fact there will always be risk involved and the best they can do to mitigate that is take out insurance and ensure they or their Agent is following best industry practices etc.

 

PMs - ignore and dismiss these new entrants at your own peril. Some of these companies are very well funded with smart and well credentialed founders. Whilst I might not agree with the models, they are a warning shot across the bow.

- Luke

 

Run Property was well funded and had impressive founders. It didn't work. That's not to say someone won't make it work one day, but it's tough.

 

It didn't work??? The 10,000 properties they had under management and sale for in excess of 60 million dollars suggests otherwise!

- Luke

 

So were they in the business of building a business to sell or genuinely delivering good customer outcomes?

My only interaction with RUN was a PM who quoted me 22% below what was fair market value and when competing PMs quoted me on a rental an IP out in Melbourne. Sample of one, but maybe not based on the above.

 

I'm not sure is the honest answer. Considering the average PM business in Oz is around 500 properties, and they built a business to 10,000 under management (I believe it was the largest PM business in the country), they must have been doing something right.

My point was simply one of caution to other PMs in immediately dismissing or underestimating them. I get it, it is self preservation. Demonstrating value against these platforms though is becoming more important. They keep getting raised on these forums which should be warning enough.

It might be a while from this but it reminds me a bit of the Netflix and Blockbuster story. Blockbuster had the option to buy Netflix early on for $50m but didn't as they thought it was a niche business that would never go anywhere. They didn't see the threat or take it seriously. Netflix now has a market cap of over $30bn, and Blockbuster?? Well I don't know where my card is anymore....

- Luke

 

But these platforms cannot compete - they are not full service, otherwise I'd be using them to run my business lol. Until A.I or automation can do IQ+EQ+personality+physical presence (to exist in the real world), a person is not being replaced.

A client who pays for a professional service is paying for knowledge, application(experience) and labour, among other things. These applications may make up for some of the knowledge part, but they lack the depth to meet the experience part (the rules are fine for people who want to follow them, but there are a lot of tenants out there not interested in following the rules, and that's where experience and how to apply the knowledge plays a massive role), and the labour - someone still has to do the physical work - leasing the property, inspection reports, repairs & maintenance, QCAT and insurance claims preparation (fact gathering), representation, litigation, etc. dealing with everything else.

These platforms do the easy stuff, (Agent offices already have tools and software that does this), they don't do everything else. They're essentially enabling self-managing landlords systems similar to what Agents use, but they're still having to do the work themselves. And if the company is also providing a PM for the labour component and the fee is only 3.9%, I'm guessing you get what you pay for (not much)..

And the cost to manage is not really a consideration for most (imo) it's a necessary cost of doing business, similar for most investment classes. The reason clients use someone to manage is because they don't want to do it themselves - it is better for them to use their time to do other things because that time makes them more money or they simply just want the time.

 

So up front, I agree with you. Sort of

The PM industry in this country is massively under par from a service delivery perspective. Sales agency is where the glory lies as a real estate agency, but most of these agencies rely on PM to prop up the business from a cashflow perspective, particularly in tougher times.

If there was a service offering that genuinely disrupted this space, I'd agree your echo of caution. But it isn't that simple. You can't write an algorithm to interpret the needs of a tenant with a maintenance issue. Not yet anyhow. Certainly without being able to effectively diagnose a maintenance issue remotely you're still going to need input from people on the ground, and hence a PM to help facilitate this to ensure you navigate the right solution and value proposition. There is so much more to a rental AVM than the AVM itself. Etc.

Otherwise, lets face it, if it was simple, I'd have seen you guys investing in a transformational AI platform that addresses the real tensions in the industry and become the Netflix of PM, right?

 

I don't think anyone that has started and run any business would say or suggest anything was simple! It is the complete opposite of simple regardless of the type of business. As I stated previously, agreeing with the model or not does not change the fact they exist and appear to be getting good traction.

The above is why these new entrants are entering the market, and rightly or wrongly, the PM industry itself has created the opportunity as you point out. I don't know if they will succeed, I don't know what their service level is like, I don't know the intracacies of their operating models. But I want to find out as much as I can. My point again was simply that to dismiss them and simply say "they won't work" or "they can't do it" I believe is risky.

- Luke

 

The way I recall it was Run Property was started by some heavy hitters who tipped in a lot of money. Then they did an IPO and the share price slide immediately and never recovered. They were buying rent rolls and I think got up to around 20,000 listings but landlords were bailing faster than they could be replaced because the service didn't live up to the promise. About 5 years ago it was sold to a real estate group and they folded it into their business. It would have sold for significantly less than the initial investment.
Maybe someone will 'disrupt' the PM industry one day. Run didn't. Perhaps Yabonza will. It's a tough gig being a PM and I can't imagine a way around having a local person on the ground with the keys in a cupboard and the willingness to drive down the road and show someone through a property or do an ingoing inspection or coordinate the replacement of a hot water unit etc etc. It's often such a hands-on job and good PMs are such a find.

 

Yep pretty fair assessment of what happened. I think total investment was around 40mil (including losses) and Agent Plus was sold with it so hard to know exactly where the value was assigned. Might not be a shining light example, but there is a paper thin line between getting it right and getting it wrong. I agree with you, but again my only point is that new entrants shouldn't be dismissed or ignored by PMs in the hope they don't work.

- Luke

 

On the contrary I think you'd find if something better did work existing businesses with their eyes open would be the first to adapt and stay at the forefront.

 

I'm sure we all have different experiences but that has not been my experience or observation of the PM industry in general. I have found generally a reluctance to embrace new ideas, minimal appetite for change (when it does occur it is generally not driven internally by the industry), and very much driven by a "this is the way it has always been done" mentality. I'm not saying that applies to you @Michael Mitchell , just a generalisation.

- Luke