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 of cash flow obstacles in the residential property space provided the inspiration for Sam Rettke’s latest venture, Realty Assist Australia 

Mr Rettke has worked with a number of companies in the sector during his real estate career, including REMAX Australia, and with BGC Australia and Stockland in the house and land space. 

Most recently, Mr Rettke was state director of UK-headquartered real estate business Purplebricks. 

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

“That was what gave me the idea,” Mr Rettke told Business News. 

“They were probably here at the wrong time of the market. Their model was starting to get traction ... because they were fronting the marketing money and paying their agents upfront.” 

The provision of funds upfront underpins Realty Assist, which launched in June 2020, completing an initial seed investment round at a pre-money valuation of $3 million.  

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

The duo likens the fintech property platform to the ‘buy now, pay later’ premise of Afterpay. 

Realty Assist operates as a cash advance model in the micro-lending space, offering agents and home sellers and renters access to funds that Mr Rettke said would otherwise take months to clear. 

“At the end of the day it’s [solving] cash flow,” he said. 

“The agency takes the risk and wears the cost itself, which puts it in a painful place cash flow wise. 

“If you’re a real estate agent it’s frustrating to have to wait for com- mission; if you’re selling your home it’s frustrating to not be able to give your house the property marketing it deserves, and if you rent a house it’s equally as frustrating to have to come up with money to cover the bond when some agencies [can] take three weeks to release it. 

“We help the client and the agency; we’re a win-win.” 

The online platform can also act as an aggregator of payments, handling accounts receivable for agencies, streamlining the stand- ard manualised administration processes. 

Realty Assist aims to tackle three problems: 

• BondCollect provides tenants with advance funds for the costs associated with moving into a rental property (including bond, pet bonds and advance rent);  

• VPACollect allows sellers to pay their vendor paid advertising (VPA) later, with the business advancing up to $30,000 for marketing, improvements, repairs and other costs associated with a property sales campaign; and 

• CommCollect gives agents timely access to commissions via an invoice factoring arrangement, instead of waiting the standard few months for commission to clear. 

Agents need to become Realty Assist members to access funds, and Mr Rettke said the group had more than 500 members using its platform, which was processing about 100 to 150 transactions each day. 

“They log into our portal, they punch in the details of the client [home seller or tenant], the client receives a request for funds and can opt to pay now or later,” he said. 

“The agency doesn’t pay us any membership fee, the vendor [or renter] pays us the interest.” 

“So, the agency is not in a risk position, we wear all the risk.” 

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

One of the platform’s key advantages was its speed of loan approvals. 

The vetting process was done mostly by real estate agencies through their own standard procedures, such as rental references, he said. 

The model had proved successful so far; to date, Mr Rettke said Realty Assist had a zero per cent bad debt ratio.  

While headquartered in Western Australia, the platform is in use nationally, with members including agents from Harcourts, LJ Hooker, REMAX and The Agency. 

Mr Rettke said innovation was an ongoing focus for the group, which planned to explore machine learning and artificial intelligence in the transaction space, which included providing quantifiable data around the relationship between advertising expenditure and listing time periods, as well as sales price.