It’s been a rags to riches journey for Australia-based property investment platform Real Estate Investar. But after listing with a $5 million IPO last December, the company is on a mission to build brand recognition for its end to end services.
Greaves is now CEO and MD of the recently listed platform for property investors, Real Estate Investar based in Queensland, Australia. He recently visited Melbourne to build up the local transaction services team for his investment property-centric mortgage broking business ‘Property Investor Mortgages’.
“Finance for an investor is very different than for a home buyer,” he tells Property Portal Watch. “It can be hard to find a good broker to get you the right sort of loan, not just for an initial transaction but to make sure you’re going to be able to do the next transaction.
“So having property-investment focused brokers as part of our transaction services team makes a lot of sense. It means our customers are more likely to succeed which means they’ll have a high degree of trust in all of our services.”
Greaves’ management team also too the opportunity to meet with the board in town to ensure the company is on track after its IPO and he’s doing the ASX broker briefing rounds.
“It’s a better quality problem to have,” he quips, “compared to the business being starved of capital before - having a great product and services without the ability to properly invest to reach our target market.”
NO INVESTMENT CENTRIC LISTINGS ONLINE
Greaves had returned home from the UK in 2003 to focus on adding to his property portfolio when he met someone who crystallized his view that the online property space held abundant opportunity as it wasn’t geared towards property investors at all.
“It can still be really tough to find properties that meet your investment criteria,” Greaves says. “Property is generally served up online specifically for people who want to buy a home, so it’s all about bedrooms, bathrooms and car parking spaces, rather than what you might be looking for as an investor.
“Online real estate has actually been really slow from a property investment listings perspective in terms of information you can use.”
The Real Estate Investar business was founded in 2006 by David Hows. The platform, which went live in 2007, started its life with an “investar search” product enhanced by tools around crunching numbers and portfolio analysis.
It was the first technology globally to deliver an investor-centric search engine which aggregated listings across the market and filtered for those that meet a user’s criteria.
“You can search for high yielding properties, buy property below value and put specific strategies into place for your next transaction,” Greaves enthuses.
“Perhaps you’re looking for rennovatable property, a sub-dividable block, or a strata title opportunity. Whatever your strategy, you can search and filter the whole market and analyse opportunities based on the investment outcome that is relevant to you.”
Since then, Greaves says, the focus over the last few years has been to bring it all together in a single platform that provides those services in an integrated way that’s easy for members to use.
OUT WITH THE OLD
Greaves himself joined the business in early 2010.
“At that stage we approached former REA Group CEO and founder of Property Portal Watch Simon Baker to come on the board in an advisory capacity,” he says.
Baker liked the idea and immediately expressed interest, but Greaves says his condition for involvement was a stake in the company.
“We danced back and forwards and Simon eventually came on board as a significant investor in November 2010.”
It was a significant turning point for the business as the first thing Baker advised them to do was scrap the company’s franchise model.
“We were trying to target our market by bringing on franchisees to engage with accountants, mortgage brokers, lawyers and agents, and anyone that had a relationship with property investors,” Greaves says
“But bringing on other parties to promote our products and services meant the customer was actually three steps away. Each one of the steps is an opportunity for the message to get diluted.
"We had over 20 franchise partners but collectively they were spending less time than two full time staff would and they were delivering even less in terms of results.
“It was highly unsuccessful and even had we got it right, Simon quickly identified that it was going to be very expensive in terms of the mouths that had to be fed in that chain. Simon understands the fundamentals of scaling a business and getting it right.”
By January 2011, Real Estate Investar was mutually terminating all its agreements with franchisees and arranging repayment of franchise fees.
SMELL OF AN OILY RAG
The current business model functions by offering a body of free members a variety of valuable subscription-based services.
“The tools we’ve created like investar search plus automated valuation models and data that we bring in and manage from partners combines on one platform,” Greaves enthuses. “You can do everything from searching for property specifically around your investment needs, to quickly analyzing those properties.
“The platform is ‘smart’. It understands the properties you own and the impact that might have on your next transaction."
Greaves says the platform simplifies the search, analysis and acquisition process for investors, and then tracks the performance of the investment, offers forecasts and now most recently the company has integrated the accounting phase.
“Our platform integrates with the Xero cloud accounting solution so you can then get automatic feeds from your bank appearing in your portfolio tracker. This means you can compare your actuals with your forecasts to ascertain where your focus needs to be, and most importantly when you might have the capacity to buy again.”
However he says the company’s biggest single challenge was being massively capital constrained.
“We operate in a high value niche with great products and great people working in the business,” he says. “But there are about 2.2 million property investors in Australia and New Zealand and the majority haven’t heard of us.
“We just didn’t have any capital to invest in promoting the business and getting free memberships to those 2.2 million people.”
FAIRY GODMOTHER IPO
Despite this, Real Estate Investar presided over 150,000 members at the time of its IPO in December last year. And listing changed everything.
With the Fairfax Group as a cornerstone investor holding a 12.5 per cent stake, the business raised $5 million to take the next step.
Domain CEO Antony Catalano sits on the Real Estate Investar Board along with Simon Baker and Joe Hanna both of the Mitula Group and Ian Penman who previously ran Compaq in Australia. They offer a wealth of product and technical real estate knowledge plus a clear strategy about how to operate in a big, high value market.
“Now that we’re well capitalized, we realize we’ve got all the elements in place so its now all about positioning ourselves to build our brand. We need people to know we exist, then we can begin the process of learning about them as property investors.”
Greaves says the company is focused on adding to its team to execute plans to grow its free member numbers, and importantly to find out more about what members want and where they are in the investment cycle so the business can then marry up the paid subscription products and transaction services it offers.
“We’re looking at property investment from an end to end perspective, so we provide a platform that enables you to do everything from searching to analyzing, acquiring, tracking and accounting,” he reiterates, “but there are also a lot of services along the way.
“For example we can help facilitate mortgages or the actual acquisition of property, provide depreciation reports, refer customers to partners for legal or financial advice, even offer educational courses. We are already generating a lot more activity in the transactional space.”
ONWARDS AND UPWARDS
“The great thing about this business is that we’re a one stop shop for property investors and there’s nothing else on the market quite like us in that way,” he adds.
“We have all these free tools and resources with a good number of members signing up for paid subscriptions. They’re getting a lot of information and value so we’ve got a great relationship with them. We’re perfectly positioned to align other products and services.”
While Greaves has a vision to expand the platform globally, the first focus is on potential investors in Australia and New Zealand. With 2.2 million current investors and a large number of people that aspire to own investment property, he says the opportunity is large.
“We plan to scale the model in Australia so we can refine our offer then take that to other markets to do exactly what were doing here,” he says.
“It will be interesting to see how the market responds as we finally start to release the value in the business now that were well capitalized, have a great structure and board. I think we will surprise a few people.”