Fintech targets cash flow woes

Perth-based Realty Assist hopes its online platform can help address some of the financial challenges facing the real estate industry.

Firsthand experience with cash flow barriers in the residential real estate space was the inspiration for Sam Rettke’s newest company, Realty Assist Australia

Mr. Rettke has worked with a number of companies in the industry during his real estate career, including REMAX Australia, as well as BGC Australia and Stockland in the home and real estate sectors.

Most recently, Rettke was State Director of the Purplebricks real estate business, headquartered in Great Britain.

The company’s exit from the Australian market in 2019 prompted Rettke to reassess the inner workings of real estate transaction processes.

“That was what gave me the idea,” said Rettke to Business News.

“You were probably in the market here at the wrong time. Their model was starting to take off … because they raised the marketing money and prepaid their agents. ”

The upfront funding underpins Realty Assist, which launched in June 2020 and completes an initial round of seed capital investments with a pre-money valuation of $ 3M.

Mr. Rettke co-founded Realty Assist along with local entrepreneur Peter Wall, who is a partner at the Perth-based law firm Steinepreis Paganin and, among other things, is the non-executive chairman of the Sharequity platform for digital equity markets.

The duo compares the fintech real estate platform with the premise “buy now, pay later” from Afterpay.

Realty Assist acts as a prepayment model in the microlending space, providing brokers, home sellers and tenants with access to funds that Mr. Rettke said would otherwise take months to clear.

“At the end of the day it is [solving] Cash flow, ”he said.

“The agency takes the risk and bears the costs itself, which makes cash flow painful.

“When you’re a real estate agent, having to wait for commission is frustrating. When you sell your home it is frustrating not to be able to give your home the real estate marketing it deserves, and when you rent a home it is just as frustrating to have money to cover the loan when some agencies [can] It takes three weeks to release.

“We help the customer and the agency. We are a win-win situation. ”

The online platform can also act as an aggregator of payments, process claims for agencies and streamline the standard manual administration processes.

Realty Assist aims to address three problems:

• BondCollect provides tenants with prepayments for the costs associated with moving to a rental property (including bonds, pet bonds, and pre-leases).

• VPACollect allows sellers to pay for their vendor paid advertising (VPA) later, with the company receiving up to $ 30,000 in marketing, improvements, repairs, and other costs related to a property sales campaign. and

• With CommCollect, agents can access commissions in a timely manner through an invoice factoring agreement instead of waiting the standard months for the commission to clear.

Agents must become Realty Assist members in order to gain access to funds, and Rettke said the group had more than 500 members using their platform, which processed around 100 to 150 transactions daily.

“You log into our portal and enter the customer’s details [home seller or tenant]The customer receives a request for money and can pay now or later, ”he said.

“The agency pays us no membership fee, the seller [or renter] pays us the interest. ”

“So the agency is not in a risk position, we bear the entire risk.”

Mr Rettke said interest rates were charged at different rates depending on the Realty Assist service, and that those rates were generally higher than typical lenders (banks) but generally cheaper than credit cards or personal loans.

One of the main advantages of the platform was the speed of loan approvals.

The verification process has largely been carried out by real estate agencies following their own standard procedures, such as: B. Rental references, he said.

The model had so far proven to be successful; To date, Rettke said Realty Assist has a bad debt rate of zero percent.

The platform is headquartered in Western Australia and is used nationwide. Members include representatives from Harcourts, LJ Hooker, REMAX, and The Agency.

According to Rettke, innovation was a constant focus of the group that wanted to study machine learning and artificial intelligence in the transactional space. This included providing quantifiable data on the relationship between advertising spend and listing periods, as well as the selling price.