New Property Management Software HouseNexus.com.au (Ep280)

ARVE Error: Mode: lazyload not available (ARVE Pro not active?), switching to normal mode

House Nexus is a new property finance management software that allows you to track the income and expenses of your property and see how it is performing.

Hey guys, Ryan here from onproperty.com.au, your daily dose of property education and inspiration. And today I have with me James Ryan who is the founder and managing director of a new property software they call HouseNexus and today we’re going to be talking with him about why he started HouseNexus with his cofounders and what it does and how it could help you guys.

 

Ryan: So thanks for coming on today James.

James: Thank you Ryan.

Ryan: Okay, so let’s just do a broad overview to start with. What is HouseNexus and what does it do?

James: Sure. So, HouseNexus is an online platform for your investment properties basically. It’s for investment property analysts to get a better understanding of the financial return on their property, get really clear visibility of where all their dollars are going; so, where all your expenses are, how much you are paying your mortgage, what the rental return is for your property, tracking the valuation in time, all the things that you really have to know to have a ground understanding of your property.

Ryan: So, basically is that an income-and-expense tracker? And generate reports or something?

James: That’s exactly what it is, yeah. We keep track of your mortgage and your rent and your assets and your expenses and we automatically generate reports that you need from there like depreciation schedule and capital works deductions and financier reports, all things that you really need to be on top of your property.

Ryan: And so, that would give us, as investors, better visibility of our property and I’m guessing those reports are something that we could take to our accountants at the end of the year?

James: Yeah, absolutely. So we are trying to give you confidence that you know that figures are correct and clarity as well and convenience to use. Yes, that’s something that HouseNexus is going to do – the ability to share these reports with your partners. So if you have an investment property, you probably have an accountant as well, you probably have a mortgage broker that you go to occasionally, you may have a financial adviser that looks after everything and a real estate agent to manage it as well. So HouseNexus is going able to let you share that data with all these partners so it’s really easy to go to them and give them a really quick rundown and a clear overview of how your properties are performing and exactly where you are at.

Ryan: And so then I don’t need to necessarily generate reports to send to my accountant. They could just log in and get access to that if I want them to, is that right?

James: That’s exactly right and they can view data and they can also make changes and administer it for you, they can upload documents. We’re just trying to move away from people like essentially reinventing the wheel for themselves every time like doing this in a spreadsheet or some other software that’s not perfectly suited to investment properties. So which you want to be… the fact they’re standard for, if you have an investment property in Australia, HouseNexus is what you use to manage it.

Ryan: Okay, so for the entry of all the income and expenses, is that all manual entry? Or does it sync with bank accounts? How does it work?

James: At the moment it’s a little manual, you can manually upload the details of your assets. You can manually upload all your expenses. We have automatic importing of QIF files from your bank so you can automatically go into any of your online banking portals and grab those transactions and upload them in there.

Ryan: What are QIF files?

James: They’re like the mild files. So you can export all the transactions from your bank accounts and you can automatically upload those. But moving forward this year, we are looking to have xero integration as well and possibly some automatic bank feeds that we can set up.

Ryan: Okay, cool. So obviously you guys are just in soft launch at the moment.

James: Yeah.

Ryan: So obviously features are going to be added down the line as what happens with software, it starts off doing its job and over time you add and make it better and better.

So HouseNexus, how’d you guys come up with the name for it? And what does nexus mean?

James: Nexus, it’s like the center of everything. Much like the Google Nexus phone, it’s trying to be the center of your life.

Ryan: Is that what nexus means? It means center?

James: Yeah. I believe it is. I think that’s the definition. But yeah, it kind of just makes sense. We initially started out with the idea to be kind of a 3-way between your agent and tenants and owners but that problem of the cause of relationships has been largely solved and kind of evolved into being more of financial management tool because that’s the problem that we found property owners have. They already have an agent, they’re fairly happy with how it’s managed and that dealing with their tenants is not so much of a problem and the tenants don’t really have a problem. But the financial return, a really clear understanding on that is not something that’s been done really well.

Ryan: So okay, how did you guys come up with the idea to solve this financial problem? Was it back-of-the-napkin sort of meeting with your cofounders? Or did it come through interviewing people? What kind of gave you the idea for HouseNexus and how did you go down this path? Talk me through it.

James: More like my cofounder actually. Chris had an investment property and like all good startups they come with a real problem. He had a property and had to choose getting really clear statements from his agent on how he’s performing; found things that were difficult that he didn’t realize like you had to do depreciation schedules for assets; if you buy things you can’t just dispense them in a year, they go across multiple years. He really didn’t have an easy way to solve his problems like a portal where he could look into and do everything online, like everything’s moving through these days.

My parents have had several investment properties and I’ve come across all the typical problems that you could get with you know, damaged properties and poor returns compared to other investments that we find and from what we’ve asked so many property owners about 80% don’t actually know what their financial return is when you ask them. A lot of people make this assumption that buying an investment property in Australia, it’s kind of the Australian dream, that it’s just a no-brainer, a bit of a set-and-forget but that’s certainly not always the case. In the current market, it is with the property prices going like they are but that could definitely change in the future. And if you’re not in one of those great markets then it’s not a given that you’re going to have a positively geared property although it’s kind of performing particularly well.

Ryan: So basically you’re saying that roughly 80% of investors have really no idea what their financial returns on their property are and they’re probably just looking at equity growth and the property going up in value. They’re not even considering annual financials.

James: Exactly! And even with the property going up in value, a lot of that’s not had facts like they’re not getting bank valuations done, which is the only really clear way to show property growth, that’s just a bit of a rule of thumb. They might be looking at a similar property in their area, how that’s growing with time…

Ryan: And then they just make figures in their heads and say, oh yeah, the house next door’s sold so my property’s worth a hundred grand more than what I bought it for…

James: Exactly. Yeah, it’s a little bit more than a motional thing rather than a hard and fast thing and you really have to be quantitative when you’re dealing with your investments, yeah.

Ryan: So if investors have access to these data, what do you think they’re going to do with it to help them, move them forward with their goals, which I’m guessing is obviously, more properties, more growth, and more financial freedom? How does this clarity help them move forward?

James: Well, essentially, bridging the gap between data and information and property, so you already have all these data, like you get your statements from your real estate agent and you know what your expenses are that you have to pay for like your land tax and your water and the property insurance and all the rest. Essentially taking that data and digesting it into reports, they’re really easy for you and your accountant to read  and a really clear picture of how your property’s growing with time, what your cash flow is in that property every year; essentially what the return is and how geared you are. So, with that information that empowers you as the owner to be able to make decisions, when you’re ready to take on the next property; if you want to take that information to a mortgage broker, it can be much more clear with your financial advisor. It’s going to make the process a whole lot easier for them to work with you, to be able to make a decision, with the position on your property and the portfolio that you have now. You’re probably ready for your next one or perhaps it’s more prudent to wait a little while longer and just ride it out and get a little bit more of this property before you move on to the next one.

Ryan: Yeah. And I guess one of the things that I’ve just been thinking about that would be useful because a lot of people who don’t track their expenses and stuff, at the end of the year, obviously they need to track those, so they get their shoebox to their accountants with all the receipts in it or they do their tax returns however through Excel or whatever. But then you get your tax return back and then you file it away and then you never really look at it and so looking at, if you’ve bought a property over five years, looking at how did that property perform over the last 5 years, is it performing better this year than it was last year. I feel like if I have access to that information that would open up my mind to be able to say, Okay, that property is performing worse or it’s performing a bit better.

What can I do to improve it? Like the value for me would be, over those cumulative years, being able to see my portfolio and how it’s changing and how the cash flow is changing and so I can make decisions based on the trends that I’m seeing.

James: That’s exactly it, that shoebox that you said, is the problem that we’re trying to solve where it becomes a once a year thing where they kind of gather up all these documents and just dump them on their accountants and then they kind of make sense of it and say, Oh cool. We kind of made some money there. But we’re trying to move to more of where people are on top of it as they go and make it really easy to use, you can upload documents from your phone or your tablet, we’re looking at having concierge features where you just like send us a copy and you just take a photo of it or forward the bill and we just automatically take all the details and file it for you.

Ryan: That would be an awesome feature because most people don’t do it because they can’t be bothered. But if you could just send it away and someone else fills it out for you and puts it in document or in your platform so that then I can see it. That would be super awesome!

James: Exactly. So we’re trying to move to that thing where people keep on top of their property as they go and make it easy and friendly enough to use that it doesn’t become a hassle and that when they add data, they’d be able to see how that reflects the changes; because I add that expense, as the lease gets resigned, the rents go up; how’s that going to impact the performance of their property.

Ryan: And then, is there future predictions as well built into the software, like you said, if rents go up, can I see how’s that estimated to affect my cash flow this year?

James: Yeah, absolutely. So once we’ve got all the data in there, the first thing you do is reports obviously so you do all historical stuff looking back. And then from there we’re going to be able to put a bit of smarts around forecasting like you said the future performance. So once we get a pretty good idea of the profile, bills around the property for a year and all the other associated expenses and the big obvious ones, the rent coming in and the mortgage going out and with a few other details, your assets and valuations, we’d be able to build up a profile and forecast with time and show you a forecast of how that property’s expected to perform. And that leads to a few other things like doing what-ifs scenarios; what if we increase the rent by a few extra percent this year or what if we brief-finance this mortgage or what if we draw down on some of the properties or should we go and get a bank valuation and see really how it’s grown with time. So they’re all the features in there.

Ryan: So I think that what-if scenario is super valuable because I have a tool called the advance property calculator which is inside my membership site and I know people use that for what-if scenarios and they can go through and say, what if interest rates go up 1%? Or what if I can do a renovation that cost me 10 grand and I can bump the rent up by 20 or 50 bucks a week? or whatever it is.

People like to project forward and see that and so I think that what-if scenario would definitely be something that people would love. And it would be good just to be able to sit down and say, here’s my situation, here’s the historical data and I want to achieve financial freedom or whatever it is that people want to achieve and you can do a bunch of what-if scenarios and then get the best bet as to what’s going to move you towards your goal faster. So that sounds like a pretty valuable tool.

James: And that not only applies to people that have one or portfolio properties. That’s definitely a plus for people about to get in the property market because it can be pretty daunting, if you haven’t got that experience in all these things you have to be first in. They can do these what-if scenarios on a property that they don’t own yet so that they can look around and see different areas of western Sydney at the moment, it’s one of the best ones of positively geared properties because the ratios of the rents to the house process is much more affordable than if you went with a city apartment or something. So doing these what-if scenarios is going to be useful for people entering the market too.

Ryan: So, is HouseNexus mainly for people who own a portfolio of investment properties or is it for people who just own their own home or is it for people looking to invest in their first property? Who is it really for?

James: Homeowners can use it too but it’s direct to those investment property owners owning one or more, like a small portfolio. We will be adding portfolio reporting as well so you can see how likely these are performing. But at the moment we have a flat crossing so a limited number of properties, if we have people that have 50 properties in the future and they want extra features or whatever we may look for in that crossing but at the moment we’re just giving it away for one flat cross so whether you have one or a portfolio of properties.

Ryan: Okay. And is that price set at the moment or is that price changing and so we don’t want to share it?

James: No, the price is set. We’re giving it away for free. We’re in an early access. But we are going to be going to $19 a month. Obviously, if you own investment property, that’s tax deductible as well. So it comes at about $240 a year. And if you think if it saves your accountant an hour or 2 of tax time and it saves you a whole lot of pain, it’s easily worth the money.

Ryan: So you can save that money back in accountant fees.

James: Yes, absolutely. It’s deductible against your property and yeah, it’s probably going to save your accountant that time directly.

Ryan: And if people want to check out that free trial or even if they check out later once it’s moved past the free trial, you guys can go through my fill it link if you want, which is onproperty.com.au/nexus, N-E-X-U-S or you can go to housenexus.com.au to check that out.

So, going back to you and your founder, how did you guys get together and how did you work together to the side to make this? Obviously, he had investment properties; he saw that there was this issue. How did you guys end up teaming up to say this is something that we want to tackle and make a business around?

James: I actually met Andrew, my cofounder, at university. So we did mechatronics engineering together, so we finished a couple of years ago. I went out and got in engineering and then a project management job and I wasn’t really happy with it. I wasn’t getting much out of it so I left that job. I chatted with Andrew and said I want to start a web-based service and Andrew said, I’ve had this idea, a problem that really needs to be solved.

It’s been kicking around for a long time. Andrew has a long standing back, like 15 years in software engineering for big mining companies and government organizations. And so we thought we’ll team up together and create this web platform that works across everywhere and solve this problem that heaps of people have.

Ryan: Yeah, which is how to track my finances and work out how this is performing.

James: Exactly.

Ryan: So who did the coding stuff, was that yourself or Andrew?

James: Yeah, we’re actually both tech guys so with an engineering background. Andrew has more than a decade of software experience. I’ve been a software guy since I was a kid and we also have a developer working for us, Michael, as well. So, we’re all tech guys at the moment. Andrew’s running his own business in New Castle for many years delivering big projects to the clients so he has that business experience as well. I have that project management experience, coming out of a corporate job, so we just like to take that and go do the start-up things.

Ryan: And you want to quickly talk about that as well because I do have a bunch of buyers’ agents listening to my podcast. Do you want to talk about your partnership program that you’re launching?

James: Yep, yep. So, HouseNexus like we said because if you have an investment property, you are going to have all these people that you deal with, they’re all specials in their own rights, like throughout that whole life cycle of having investment property from your buyer’s agent and then your mortgage broker and then the financial advisor that you’re probably going to consult before you buy. And then going on throughout the lot of the property, you have to have an agent that does all the administrative stuff and deals with the tenants and all the things that we find the property owners just don’t want to do. And you’re also going to have your accountant to do that analysis for you. Because we are going to share that data, we are going to be partnering with all types of people to provide HouseNexus to their clients. So if we partner with one of your agents or accountants, with you be getting HouseNexus as part of your interactions with them at no cost to you and then the partner can administer your data and see how your property is performing for you.

So anyone who’s in the real estate industry who’s interested in what we’re doing, we’re in discussion with some partners at the moment. We’d be more than happy to talk with anyone who would like to work with us.

Ryan: Yes. And basically, if you’re a buyer’s agent or an accountant or something like that and you have clients who you think need help managing their finances, you can actually recommend HouseNexus and work with them. So for buyer’s agents, for example you know, I’ve worked with Ben who I’ve recommended a couple of people to, he recommends a property to someone, they buy it, they use HouseNexus to log it, and if they’re working with him long term, then they can both get access to the data, if the person chooses to share with him. And he can see how this person’s doing and he can follow up in a year or 2 years or whenever the position is right for them, which I think, like for buyer’s agents, in terms of following up with clients, because generally people don’t just want to buy one property to achieve financial freedom, they’d want multiple. So for a buyer’s agent to be able to see, Okay, this person looks like they’re in a position where they might be able to go again rather than just picking up and giving a random phone call to someone whose property might not be going up to value or might not be in the position. I just think if you’re working long-term with someone, with  an accountant, with a buyer’s agent  or a mortgage broker, it just puts you in such a good position for them to help you without you even thinking about it really.

James: Yeah, exactly. That’s the whole idea that we just want to keep people on top of it all the time and really transparent in that relationship with their partners so that you’re not just getting the pushy phone call from the once every 6 months but they really have the clear understanding of how that property they sold to you 2 years ago is performing and it’s doing well and that it’s now the best time for you to jump on board with the next one.

Ryan: Well, I know the next person, like with the mortgage broker – I work with one I really like, so I wouldn’t really care for the fee if he called me any time. But for a lot of people, like I’ve had in the past, mortgage brokers just call me, just a follow up call and trying to sell me on a loan and they don’t even know in what financial position I’m in, if I’m in a position to buy and I can’t do it and they’re just wasting my time…

James: Exactly.

Ryan: I mean, it would be so good for them and I would like it as well. If I’m investing or if I’m working full-time  and I’m a pretty passive investor, if I can get my mortgage broker or my buyer’s agent  to just call me once we reach a certain point on something and they can know, Okay, you’re ready to buy. They call me and they’re intelligent about my situation and I’ve committed to working with them long-term anyway, I’d be absolutely stoked to receive that call and say, Oh yeah. You think I’m good? Let’s look into this in more detail. So I can see that from a consumer’s perspective, the person who owns the investment property, obviously there’s value because you can minimize accountant fees, you can manage everything and see that and also working with your partners. I can see now how that would be extremely valuable for mortgage brokers, buyers’ agents because obviously then they can get repeat clients, which is great. But then it also helps the consumer because they can move forward when it actually suits them, not just when someone calls them because they’re doing some prospecting or something.

James: Exactly, yeah. And we’re just trying to augment that relationship with each one of those parties that you deal with. One of the common things that we get is, Are you a property management platform that is going to put real estate agents out of a job? No, we are not trying to undercut what the agent does. We are not trying to undercut what the accountant does or what the mortgage broker does. Each one of these people, you deal with them because they’re specials on their own. But we’re trying to use this platform to give you real transparency and just augment and make that relationship really clear and beneficial between all these partners so you can, like you said, move towards financial independence quickly.

Ryan: You can’t replace the mortgage broker and stuff because they still need to look at your situation and help you out..

James: Yeah, exactly.

Ryan: Yeah, in terms of, like you said with rental managers and stuff like that, that problem’s pretty much solved. Rental managers are doing a pretty good job. It’s not too expensive in order to get a rental manager but I think you’re right. The problem that you’re trying to solve is a problem that’s out there. It think you can make it easy for people to put in their data especially with that concierge service, people can just send in forms and you guys will populate it. I think people would froth for that. I know a bunch of investors who have multiple properties or even one property, for a lot of people it really is just overwhelming. They don’t know what their expenses are. They don’t know what they’re meant to do. If they can just have a platform and send it to someone and then get recommendations on what to do or project forward. I think that’s going to be really valuable.

So, when are you guys launching with all your features and stuff like that? I’m going to get you back on the show to talk more about it. We’re going to go through the software when that happens. Do you have a timeline for when that’s going to happen?

James: We’re still probably about two months away from some really solid features that we really want to get out there. So we can do really fancy reports and start on that forecasting, the concierge service and stuff. But in the meantime, more than anything we’re after the feedback from people. Jump in there housenexus.com.au, sign up for the free trial, it’s completely free at the moment. Have a poke around and tell us what you love, what you don’t like, what you love changed. We’re really nimble, we’re start-up. We’ll respond to your emails personally. We can take any of your feedback on board. We just want people to tell us honestly what they think about it and what they want in the product and the features sets, whether you’re the investment property owner or a potential partner. Get in touch with us and tell us what you think.

Ryan: Yeah. And I think people get so shocked when I actually reply to their emails. People send me emails and I reply and they get, Oh my god, I can’t believe that you replied to my email! That’s such awesome service! It’s just me, I’m just working here, I’m just doing my thing, trying to help people. And I think that’s good with smaller companies like yourself. For someone if they are willing to go in and they don’t have access to everything but hey you’re getting it for free, can’t complain there and then you’d be able to say here’s the features that I want and then the product gets built out on features that people actually want rather than just what some engineer dreamed up in his mind that he thought people would want. It’s great to hear that you guys are after that feedback. You know, I work the same way. Always looking for feedback from my costumers, trying to improve things, make it better.

So yeah guys, go ahead and check out HouseNexus.com.au or you can go through my fill it link if you want at onproperty.com.au/nexus and you can check that out. It sounds like a great product, I’m excited to have you guys back on in in about 2 months and go through all these fancy features and see in more detail and show people what this stuff can really do.

James: Thanks Ryan and we’ll catch up in a few months then.

Ryan: Yeah, it’s good seeing you James. Thanks.

James: Cheers! Bye!