Do You Need Property Management Software?
Property management software are programs that keep track of properties and tenants. The software ads often promise improved communication with tenants, automated tasks, organized files, and decreased liability. Of course, that sounds great. But is property management software actually worth the cost? We’ll look at the pros and cons of management systems so you can determine if one may benefit your business.
Benefits of Management Software
Save Time
Real estate investors balance a lot. Marketing, tenant relations, maintenance, bookkeeping, and researching new investment opportunities—they all take time. That means the biggest draw for property management software is the promise of increased efficiency and time saved. So how do property management systems save you time?
All management platforms are different, but most offer automated rent collection and reminders. Sometimes, you can even assign the payment processing fees back to the tenants. Maintenance requests also go through the software system. That means you spend less time on calls and emails.
Another time-saving benefit is that your tenant and lease information is all stored in one location. You won’t have to dig through a file cabinet or lose time trying to find a misnamed file on your hard drive. All of your files are organized for easy access. With cloud-based systems, you can access that information anywhere, anytime.
Some management programs even help you create customized marketing materials, so you can advertise open units. Most software will help with listings. You can integrate some systems with Zillow or HotPads to help you find potential tenants. Higher-end management systems let you schedule showings and sync your calendar so potential renters can set up appointments—all without having to call or email you.
Improve Tenant Satisfaction
Property management software offer a range of communication options. Some systems use text alerts. Others have a dedicated portal. A good property management system gives tenants an easy way to make requests or contact you. Using the software to respond quickly to messages can lead to improved tenant satisfaction. Happy tenants are more likely to renew their leases, so you’ll also benefit from increased retention rates.
Reduce Liability
Managing rental properties comes with legal requirements. There’s so much to keep up with: handling security deposits, making necessary disclosures, following rent rules, complying with anti-discrimination laws, and more. Some property management programs include professional lease templates or periodic updates about new legal regulations and requirements for your area, so it’s easier for you to stay compliant and reduce your liability.
You can also use the management software to screen potential tenants. Every rental property owner wants good renters, so most systems include screening services. Depending on the program, you can review credit reports, background checks, income verification, and references.
Scalability
Software that advertise as end-to-end systems handle the entire rental cycle, from listings and leases to accounting and reporting. With these systems, you can keep track of leases, handle maintenance requests, pay bills, reconcile your bank accounts, and file tax forms all from the same platform. But an all-in-one system might be more than what your business needs right now. If that’s the case, consider a scalable platform. You can start with basic features and upgrade as your business grows. Or you can choose management systems like TurboTenant or RentRedi that integrate with REI Hub or other accounting programs, letting you import information and streamline your administrative processes.
Drawbacks of Property Management Software
The Price
Although property management software can be beneficial for rental property owners, there are drawbacks to consider. Software can be an expensive purchase for a small business, especially if updates and upgrades aren’t included in the original purchase. And management systems offerings vary. You don’t want to pay for features your business doesn’t need. Conversely, if you have a complex portfolio, a one-size-fits-all software solution may not be the best fit for you.
There are free or lower-cost options for smaller-scale businesses. Just remember that customization options aren’t always available with smaller management programs. Make sure the system you’re considering offers your must-have features or integrates with other programs to cover those gaps. Look at what the price actually includes. Many systems charge an annual or monthly base fee, then have additional fees for certain features, like background checks, templates, or payment processing.
Security and Privacy
Since automated rent collection and easy tenant screening are two of the biggest draws for management software, security and privacy are two of the biggest concerns to consider. The system you use will house banking information, both for you and your tenants, plus have personal information that makes these systems prime targets for identity thieves. Check to see what kind of security and sign-on procedures are in place. How is payment processing handled? Are tenant payments posted promptly, or are there delays? Look at who the company partners with. If the screenings come from anywhere other than one of the major credit bureaus, consider another system.
Training
And, as with any software, the quality of the information you put in the system affects the quality of the reports the program produces. If incorrect data is entered, or it’s entered into the system incorrectly, your reports will be misleading. That means you must take the time to learn how to use the software properly. Some property management systems are difficult to use, and software often requires ongoing training.
Think about who will use the system. If you think it’s easy to use, but your business partner doesn’t, will they keep up with the training to learn how to use it? Or will you lose more time trying to fix errors they introduce into the system?
Remember to test the tenant interface. There’s a learning curve for every program, but if your current and potential tenants think the program isn’t user friendly, then they’re less likely to use it. You won’t see a good return on your investment if your tenants can’t or won’t use the new system.
Many property management platforms offer free trials. Once you’ve narrowed down your list of potential software providers, sign up for the trial period. Check out both the tenant and manager interfaces. Have your business partner experiment with the features, and see which options work best for you both. Remember to test the customer service options as well. If you have a problem or question, are the help resources or customer service representatives able to address the issue in a timely and helpful way? If you purchase property management software, investing some extra time during your trial period and training phase will help ensure a smoother transition.
Takeaways
There are management systems for rental portfolios of every size. Think about what you need the most help with regarding your real estate investments. Then use your must-have features to narrow down the software candidates in your price range, and test them thoroughly. Make sure the bank transactions are secure and timely and the tenant screenings are from a credible source. Property management systems can help you save time and be more efficient—but only if you’re willing to invest the time and effort to get the most out of the software.
