NestEgg: Why 2020 Changed Property Owners’ Payment Operations For Good

The real estate industry, like most others, has hustled to adapt to an environment in which most interactions and payment processes are handled remotely rather than in person.

This has included adjusting even for routine transactions such as collecting rent from tenants, a process that remains largely manual for many property owners, said Eachan Fletcher, CEO and co-founder of rental property management app NestEgg.

“Even today, I think it is a little below 80 percent of landlords [who] still collect rent in cash or check,” he said. “Then, obviously, early in the pandemic when no one wanted to see you … face-to-face, everyone was figuring out, ‘Oh, no, how do we get my rent check without having to go there [in person]?’”

These new needs have made it a top priority for property owners and managers with portfolios of all sizes to reduce their reliance on manual payment options and create support for more seamless digital payments. Ensuring the easy collection of payments and management of outgoing expenses during interactions with tenants and industry partners is a must for property management firms as they begin shifting toward a more virtual environment.

Digital-First Real Estate

The real estate space has been ripe for innovation for some time, but the events of the past year have pushed many to reconsider which tools they use to send and receive funds. A growing number of landlords are interested in solutions that allow them to take charge themselves without hiring costly property management firms, Fletcher said. This is particularly true for the smaller property owners with between one and 10 units, which is NestEgg’s primary market.

“Searches for property management apps were sitting at 200,000 to 300,000 unique searches a month on Google for a long time, and it is now between 1.1 [million and] 1.2 million unique monthly searches,” he said. “We believe a lot of that appetite [for] technology solutions to try to do more for themselves has come from the fact that [many landlords are] like, ‘Hey, if I can figure out how to [manage] this myself, I can put between $200 and $400 a month per unit back in my own pocket.’”

This can represent gains of between $5,000 to $7,000 per month for some of these smaller portfolio players, he continued, a significant draw considering the financial hardships faced by property owners and tenants alike over the past year. Figuring out how to simplify even routine incoming and outgoing payments should thus be top priority for landlords. NestEgg offers a solution called NestEgg Pay on its app that enables more flexible payments among tenants while also allowing landlords to manage expenses like building maintenance more easily, he said.

“So let us say [there’s a] leak in the roof [or] plumbing, [and the landlord] needs to go around and fix it,” he said. “You can do that through our platform … [and if] it is $600, instead of that $600 coming out of your account right now, effectively you pay nothing this month. As next month’s rent comes through, we take $100 a month from the next six rent checks over six months until your balance is effectively repaid, so there is no credit check.”

Even simplifying such routine payments can benefit property owners and their tenants, giving smaller real estate players the transparency and speed that they need to compete in the broader real estate world. Larger entities within the space may have an advantage over smaller players when it comes to adjusting how they operate in this expanding digital environment, however.

The ERP Advantage

Large-scale property management players often manage sprawling real estate portfolios that come attached with more expenses and more complexity than the landlords that make up NestEgg’s userbase, Fletcher said. These players can also build out robust, innovative technology stacks that enable them to stay on top of all these moving parts. They use tools such as enterprise resource planning (ERP) systems that can aggregate disparate organizational processes into one place to smooth out their pain points, for example.

“When you have a pretty vast organization where you have a lot of logistics, a lot of organizational tasks, a lot of resources in a lot of different places, being able to organize all of those things into sensible, productive workflows and understand where you are oversubscribed and undersubscribed … is super essential,” he explained. “And in large real estate businesses … the big corporations that own the huge high-rises, that is what they live and breathe every day: ERP systems to help manage … the sprawling domain that they have right now.”

ERP systems enable large organizations to better track the various data and payment processes surrounding their properties, and this task is becoming more important for real estate players. Apps such as NestEgg can provide smaller landlords with the ability to more closely manage their units in a similar fashion as payments become more complex. Players of all sizes must organize their own payment processes to suit the market’s demands.