From the company’s perspective, challenges arise when tenants do not pay their rent. We are the party that manages this and it is in our interests to attract good tenants to our platform. - Wong
For the past three years, property investor Earnest Wong had been finding it difficult to deal with some of the tenants of his properties in Sentul, Kuala Lumpur.
“I rented out my units through online listing platforms and my network of friends, who are property agents. While most of the tenants were good paymasters, some failed to make payments after a few months. I had to constantly remind them about it,” he tells Personal Wealth.
“As for those who paid on time, I had to answer their calls whenever there were issues such as leaky faucets or overflowing toilet bowls. I would put them in touch with a maintenance guy to solve these problems. The whole process could be quite exhausting.”
These experiences prompted Wong to search online for local solutions that could help him manage these issues. But he could not find any that were affordable.
“There are property managers and real estate agents who offer such services to their clients on a personal basis. But they usually take an 8% to 10% cut from your monthly rental fee, which is quite significant,” says Wong.
This gave him the idea to start something of his own. In 2016, he talked with his close friends and family about launching a technology-powered end-to-end property platform for property listings, screening of potential tenants, rental collection, maintenance and provision of legal services.
In general, the feedback was negative. “They said there were many processes involved and these are tedious and mundane,” says Wong.
He had been a commercial banker before he ventured into the insurance industry and founded tackletherisk, an insurance agency under Hong Leong Assurance Bhd. He did not come from the property industry or have much experience dealing with property-related businesses. However, all this did not stop him from registering Blue Duck Tech Sdn Bhd last year to put his plans into action.
“I believed that it would work. The platform would be the first of its kind in the market,” says Wong.
He came up with the name “Blue Duck” as he wanted one that would be easily remembered.
Property agents assigned to facilitate process
Blue Duck provides services to both prospective tenants and landlords. Wong says landlords need to open an account with the platform providing their basic information online. Then, they have to pay a yearly subscription fee of RM350 to access the pool of tenants who have registered with the online marketplace.
Landlords, who list their properties on the platform with the help of a property agent, will be notified when prospective tenants make requests to view their properties. They can screen these tenants looking at their credit scores before making further arrangements. “We have the consent of these tenants to access their credit scoring information provided CTOS Data Systems Sdn Bhd,” says Wong.
Once an ideal tenant has been identified, landlords can click on the approval button on the screen and the property agent, who has been assigned the platform, will arrange for a viewing of the property. A tenancy agreement will be signed when the tenant is satisfied with the outcome.
Landlords who register with the platform can have their own property agent facilitate the process. But for those who do not have one, the company will assign an agent to them, says Wong. “Some of them may have friends or relatives who work as property agents. They may want to engage the services of people they know.”
He says the platform does not exclude property agents from the process and agents will receive a one-month rental fee for providing landlords with their services. “We are not disrupting the [traditional rental] market, but trying to make the existing process smoother utilising technology. From a business perspective, it is a more viable business model as about 80% to 90% of property transactions are still done through agents.”
The additional value that Blue Duck provides include rental collection and maintenance services, says Wong. On the collection side, the company plays the role of rental collector to remind tenants to pay their rents when the due date is near. The money will be transferred from the tenants’ bank account to the company’s before it is transferred to the landlords’ bank account.
After the transaction has been done, tenants are required to upload their receipt to the platform, which will then notify the landlords of the payment. “The landlords will receive payment within three business days,” says Wong.
It should be noted that the three months’ deposit paid the tenants is sent directly to the landlords’ bank account. The company does not conduct any deposit-taking activity.
What if the tenants refuse to pay the rent? “We have our legal advisers ready to take further action,” says Wong.
If a tenant disappears without making payments, the platform will blacklist the person and block him from using the platform. Meanwhile, the landlord’s property will be relisted online.
“From the company’s perspective, challenges arise when tenants do not pay their rent. We are the party that manages this and it is in our interests to attract good tenants to our platform,” says Wong.
A partnership between Blue Duck and Kaodim.com is aimed at solving any maintenance issues between landlords and tenants. “Instead of calling the landlords, tenants can go to our website, which is partly powered Kaodim.com, to solve many of their maintenance issues,” he says.
Landlords who subscribe to the platform are entitled to home content insurance with an assured sum of RM10,000 and fire insurance of RM130,000. “Any damage caused fire is covered the fire insurance while piping issues and furniture damage is covered the home content insurance. However, wear-and-tear damage, such as those caused cleaning or fixing the air-conditioning unit, is not covered the insurance and requires tenants to fork out their own money,” says Wong.
According to Wong, Blue Duck is unique compared with other property technology (proptech) start-ups. For instance, there is a platform in the market that facilitates the listing and rental of properties as well as helps to screen potential tenants using their credit scores. However, these platforms do not provide landlords with after-sales facilities such as rental collection and maintenance services, he says. “Most platforms provide services up to the stage where a sale and purchase or tenancy agreement is signed. But we go beyond that.”
Wong has plans to collect rental data through the platform for further analysis and prediction. “We could tell people what the rental rates are like in certain areas and probably predict the trends going forward harnessing the capability of artificial intelligence. Several portals in the market have property transaction data, which means the buying and selling prices of properties in the market. But none of them have rental data,” he says.
Thus, Wong is on the lookout for potential investors. “We are looking out for strategic partners who would allow us to leverage their strengths. These are players on the ground such as property agencies that can bring their agents and landlords onto our platform. There are a few who have shown strong interest in us,” he says.
“We are also engaging with banks and other institutional investors that can invest a large amount with us, enhance our brand name and increase our credibility. After all, the property business is based on trust.”