The best property management software is the one that fits you. Your portfolio size, the way you operate your business, your future goals, whether you self manage or manage for others, and what type of properties you manage (single family, multi-family, condo / home owners association, commercial) are some of the factors that play a part in what software your should purchase for use in your property management business.
While most property management businesses do many of the same basic functions, they still can have their individual uniqueness. A small self-managing landlord may have different requirements and desires than a mid-sized or large self-managing landlord. Third party property management companies often have legal requirements that self-managing landlords may not (i,e., trust accounting for owners). Multi-family properties have different requirements than single family homes.
When looking for the best property manage software system you must consider whether the software will fit your individual requirements. In this article I will discuss four areas to consider when choosing to purchase property management software. I have created an acronym FITS for these for areas which stands for:
- Features that you need
- Improves Efficiency and Effectiveness of your business
- Time Value of Using The Software
- Scalability of The Software
Features of The Software
Digitizing and Automating Your Processes, Policies, and Procedures
The first area to consider when looking for property management business is what are the processes, policies, and procedures you want to automate. You should create a list to include the current process and procedures and any new processes and procedures that you want to implement.
If you wanted to purchase a pair of shoes would you go out and ask your friends what size they wear and then purchase a pair of shoes in their size? No. But that is what some people may do when they purchase software to automate their property management business.
After you have done an internal inventory of processes and procedures that you currently have and those that you want then you can look to other sources. There are several outside resources you can use to expand your property management software wishlist including:
- Internet searches (Landlord / Property management related sites and other sites)
- Other property managers / landlords
- You CPA or other accounting professional
- IT professionals
- Property management IT professionals
Remember when you use these resources you are looking for features that you want to use in your business. You are not looking for a specific software recommendation. The question you should ask is “What features or functionality should I be looking for in a property management software?” and not “What software should I use in my property management business?”.
Three (3) Categories of Software Used In Property Management
Property Managers can use either full featured property management software, limited featured property management software, or general purpose software to automate processes in their businesses.
- Full featured property management software has features to automate most of the core functions of property management including : accounting, leasing, tenant management, maintenance, and reporting. Such property management software packages are built with a focus on property management.
- Limited featured property management software usually is focused on one area of property management or just a few of the core features of property management.
- Many property managers and landlords use general purpose software in their property management business. Some use general purpose software as their main property management software while others use it to augment their property management software package.
By identifying the features that you need and/or would like to automate your property management business, you can choose the software or combination of software that fits your feature needs.
The next step is to identify which software or combination of software will improve your efficiency and effectiveness.
Improve Your Effectiveness and Efficiency
Getting The Job Done And Conserving Resources
Effectiveness and efficiency are not the same but are related. Effectiveness has to do with the ability of someone or something, software in our case, to get the job done. Efficiency has to do with amount of resources used to get something done like time, energy, and money.
There may be many ways of getting something accomplished (effectiveness) , but they all may not use the same amount of resources (efficiency). On the other hand many methods of doing a task may be more efficient than another but not as effective as the less efficient method.
One example of this is charging late fees. A general accounting software may have a feature to charge finance charges but not in the method you want to or are legally able to charge late fees (e.g. daily late fees or only on rent and not other charges). If you chose the general accounting software you would either not be able to use its automated feature or not charge late fees the way you would like. This general purpose software would not be a good fit for you.
Effectiveness and efficiency are the return on your software investment. Once you have identified which software will help you obtain the return of effectiveness and efficiency, you need to evaluate how much time and energy you want to invest to get the return that fits you.
Time Value of Your Property Management Software Investment
Many investors are familiar with the time value of money. Generally speaking the faster money is invested the more the investment will return over time. Investing more money today will generate more return over time than if you invest in installments. This has more upfront costs but in the return is greater.
The same can be said of the time value of property management software. Return of investment in software is being able to do more while conserving resources (effectiveness and efficiency). Your investment in software is not just the cost to license the software but also the time and energy to setup and implement the software.
A property management software may seem complex because it has a lot of features. The abundance of features may make implementing the property management software seem overwhelming. But after investing the time and energy to do so may in the long run make you more effective and efficient over time than using simpler software with less features.
Scalability: Property Management Software and Growth
When a parent goes to the store to buy shoes for their growing child, they purchase them bigger than the actual size of the child’s feet. This is so that the child has room to grow into the shows. If the parent were to buy the shoes the exact size of the child’s feet then they would have to buy shoes more often. This would increase costs and not be efficient.
When purchasing software you must consider whether you are going to grow. Do you think you will want to automate more processes and procedures in the future even after you purchase software? Will you take on more client’s if you are a third party property management business? Will you want to provide different services? Do you plan on hiring more staff in the future? Do you want to work more on your business than in your business?
If the answer is yes to any of these then you need software that will allow you to gr ow. The software you purchase may need to be customize-able to handle your grow. Such features as custom fields, user security, custom reporting, and API’s will be things that you will need to consider.
Making the decision to purchase a software that fits now with the intent to switch later may not be a wise decision. The time and energy it takes to implement, be trained, transfer your data (if possible) in the future is many times not be a better decision than just purchasing the “bigger size” property management software now.
Get The Property Management Software That FITS You
Ultimately the software or software combination that you decide to purchase is your decision. That decision should be based on what Features you need now and in the future, whether the software will Improve your effectiveness and efficiency, what Time value you want in your software investment, and the software has the Scalability to allow you to grow like you want.