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How to Really Know If You Need Property Management Software

by Tom Sylvester on December 23, 2013 · 17 comments

  
Need Property Management Software

Last week Kevin Perk wrote a blog titled Property Management Software – Is It Right For You?.  In the article Kevin describes his thought on property management software as being “one of the best things we have ever done to help our business”.  If you want to understand a little more about why Kevin made this bold statement, check out his post and BP Podcast 036: How to Be an Awesome and Profitable Landlord with Kevin Perk.

Given that my background is in software development and lean six sigma, I have always understood the benefit of using software and automating one’s business, but for some reason I could never find the right software and combination to make it make work for me. Kevin is an experienced landlord, has a ton of fantastic information to share and I really enjoy his posts.  So after listening to his podcast, I gave it a second shot to try and use property management software.

Don’t Reinvent the Wheel

Given the struggle that I had in the past with finding property management software that worked for me, I figured I would start with the software that Kevin was using (Appfolio).  I went to the website, checked out some of the free information and fell in love.  “No wonder Kevin loves this software, it is amazing!” I thought to myself.  I quickly registered to find out more information.

Over the next few weeks I spoke to representatives of the company to understand my business and their software.  I loved the software!  I was well designed and contained a ton of great features.  The problem?  The price tag did not make economic sense for my business.  I own 10 properties consisting of 21 units.  They advertise only $1/unit, but there is a $200 monthly minimum.

So I went through the list of Online Rental Property Management Software.  Most of the software systems didn’t even warrant a second look from me but I decided to take a look at Buildium.  For my number of units, it was $25/month, which fit much better into my business for the cost.  Although it did not have all of the features of Appfolio and it was not as visually appealing, it seemed to have the basics that would be needed.

I signed up for a 2 weeks trial and signed up for the first month.  As Kevin mentioned, there is a lot of upfront investment as you have to enter EVERYTHING about your properties and business.  Since I have all of this in my existing system, it was tedious was starting to seem like it may not be worth it as it was not giving me the full benefit of something like Appfolio.

After a month I cancelled Buildium, the final straw being that it did not have an accounting aspect and did not integrate with Quickbooks.  So not only would I have to do all of the work to get my information into the system, I would then need to duplicate the tasks each month; once in Buildium, then again in Quickbooks.

These systems are supposed to make life easier, not more difficult.

Disappointed…Again

I came away from this round of property management software trials again empty handed, which is disappointing.  I REALLY want to be using property management software, but as described the few that I looked at just didn’t make sense for me.  In actuality, that is ok.  If something makes sense for your business, don’t worry about trying to do something else.  If you can manage your books just fine in a spreadsheet, don’t think that you have to go out and buy Quickbooks and figure out how to use it.  KISS – Keep It Simple Stupid.

If you have a Worpdress website setup to advertise your property and that is working, don’t think you need to have this full features website that is tied into your tenant screening and rent payment system.  Again having this all connected in a seemless system is a great goal, but don’t get so consumed with finding the perfect system that you miss out on the real objective, running a profitable and quality real estate business.

So Where Did I End Up?

Since I am not using property management software, let me share the setup that I am using.

Accounting/Books: Quickbooks

The software has a ton of features, which can be overwhelming, but it has most everything that we need.  We had our accountant configure it to work for real estate and so he gets what he needs to file our taxes.

Website/Marketing: WordPress Website, Local Newspaper & Yard Signs

As I mentioned in BP Podcast 045: Finding Your Unfair Advantage, Rural Investing, and Getting Started with Tom Sylvester, I really don’t market for properties, but I do market for tenants.  I am primarily a buy-and-hold investor in rural areas, so my potential tenants generally are not looking on Craigslist but are driving past the property and looking in the newspaper.  So my current system works for my business and demographic.

Task Management: GQueues, Gmail, Google Calendar, Google Voice, Google Drive

The core of real estate (and really any business) is managing tasks and completing them.  This is the basis of what a property management system does.  It allows you to manage your tasks and hopefully makes some of the tasks easier.  More information on how I use these can be found in Put Your Real Estate Business Management on Steroids with “GQueues”  and How to Systematize Your Business for FREE with Google.

To each their own.  Evaluate your business needs and implement something that works for you.  As Kevin said,

“If you have a good accounting system in place and only a few properties it may not be worth it.  But once you acquire 15 or 20 properties or hate the hassle of developing and posting ads and accounting these systems start to make economic sense.  Then it may be time for you to look into this wise investment

Be sure to shop around.  There are many different companies out there, each offering different bundles of services and different pricing structures.  Take a test drive on each one.  After a few weeks of research, you will find the one that best fits your needs and trust me, you will never look back.”

Photo: the UMF

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{ 17 comments… read them below or add one }

Michael Siekerka December 23, 2013 at 5:33 pm

Great post! I have a background in software dev as well, and I haven’t really found anything that I felt truly simplified my REI for the amount of money being charged.

It’s only a matter of time before something comes along or somebody lowers their pricing enough for it to make sense (or I get enough units that it’s worth it).

Reply

Tom Sylvester December 24, 2013 at 10:20 am

Michael – Glad to hear that I am not alone. It seems like most of the “affordable” solutions are not feature complete but the companies that have the nice software are really geared towards larger investors and thus a higher price point. I guess we will just need to use it at motivation to get more units!

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Giovanni December 23, 2013 at 5:46 pm

Great post @Tom Sylvester

My favorite property management software comes bundled with the 3rd party property manager that we hire ;) We just hired one for a new acquisition that happens to run Appfolio and so far the reports look really nice. Haven’t logged into the owner portal yet but that will come.

It’s really too bad that Buidium doesn’t integrate with QuickBooks or have its own accounting piece, I think their business model is pretty good for small investors.

I think your best advice in the whole piece is: “Don’t Reinvent The Wheel” and I’d add at least one ! on the end of it. You have to decide what business you’re in, real estate or software development. As an old salt explained to me when I was a young sailor wanting to build my own boat; he said there are two kinds of people, those who build boats and those who go sailing. If you are in the real estate biz be in the real estate biz.

I would even extend that thought one step further: Be in the real estate owning business not in the landlord business but that’s getting off topic.

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Tom Sylvester December 24, 2013 at 10:24 am

“My favorite property management software comes bundled with the 3rd party property manager that we hire ;)” Love it!

Hopefully the guys at Buildium come across this. By just allowing the data to be exported/imported to Quickbooks, I’m sure they would have a lot more customers.

Your point about being in the real estate business is spot on. Often times when I am coaching small businesses, the person who started them wants to do everything themselves. I promptly hand them a copy of “The E-Myth” and “The 4-Hour Workweek”.

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Giovanni December 25, 2013 at 1:09 pm

@Tom Sylvester +1 on E-Myth and 4hr Workweek.

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Brandon Turner December 23, 2013 at 6:09 pm

Great post, Tom. As I was reading this, I started questioning whether you and I are the same person. This is my exact story, right now. :) I’m still not sure where I’m gonna end up but I’m leaning toward AppFolio.

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Tom Sylvester December 24, 2013 at 10:40 am

Brandon – I often make that mistake as well, then I remember that that I am not 7′ tall.

I really liked AppFolio and have on’y heard great things from people who are using it. I’ll guess I’ll just have to up my units in 2014 to make it most cost effective.

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Kevin Perk December 26, 2013 at 11:44 pm

Tom,

What better reason is there to go on a buying spree than to be able to afford AppFolio? :)

Kevin

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Kevin Perk December 23, 2013 at 10:55 pm

Tom,

Nice follow up article. Yes, we really like AppFolio, it really did make our lives much easier! But it also makes economic sense for us due to the number of units we have.

Shop around though or find something that makes your life easier. Like you say, “Evaluate your business needs and implement something that works for you.”

Thanks for the article and for the kind words. I do appreciate it,

Kevin

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Tom Sylvester December 24, 2013 at 12:07 pm

Thanks Kevin. I really love your articles and was glad when you posted about this last week. I’m sure both posts and the discussions will really help people decide what is best for their business.

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Gerald Harris December 23, 2013 at 11:06 pm

I remember the thought of buying software for the few homes that i did have. It was just not worth the hassle. I am still old school in alot of ways. Like the article says, once I start acquiring more than 10 units, I will consider it. Just nothing too complex.

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Tom Sylvester December 24, 2013 at 12:24 pm

Gerald – I think many people actually make their systems more complex than they need to, instead of less. If old school is working, stick with old school. I recommend most people do a periodic review (I like quarterly but at least once a year works as well), decide which pieces are not working and see how to adjust them. It’s always good to see if a person is spending 80% of their time on the lowest 20%. If so, that is low hanging fruit for improvement or outsourcing.

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Jason December 24, 2013 at 8:13 am

Tom,

We ran into the same thing with our business. I have not used this software, but have you looked into property tracker? $25/mo. It is recommended by one of the real estate podcasts I listen to for small owners.

Jason

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Tom Sylvester December 24, 2013 at 12:40 pm

Jason – I have not looked into it, but will and will let you know my thoughts. That is a good first step that others are recommending it.

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Jilly December 26, 2013 at 11:38 am

Have used QuickBooks for…EVER….and now it’s well worth moving it to “the cloud” through Rightnetworks” (about $55 a month) — can’t praise that company enough. Took literally less than 15 minutes to move 20 Quickbooks companies to the cloud. I love Quiickbooks – now it can follow me everywhere! And, if I ever do have a question or technical issue, I’ve never waited on hold for more than a minute — probably never even that long.

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Geoff December 31, 2013 at 10:12 am

I have been using rentec direct for my 22 units for around $25/mo. For rent collection, I use rent payment now, an electronic service that also serves the cash paying tenants using money gram locations. Both are online so you can access from anywhere. That service is $1/mo per transaction. In my ideal situation, those 2 services would be combined and sync automatically. I am not computer savvy but I have been generally happy with the services, especially at the end of the year as I just print out expense reports and hand to my tax guy.

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Greg Jackson February 7, 2014 at 2:11 pm

Cool post Tom, thanks!

I’ve been a software sales engineer for years, love real estate, and so thought it would be fun to work for one of these vendors (or one of their customers).

As part of my research, I tripped over this vendor review, and thought you and the rest of the BP gang might benefit:

http://online-property-management-review.toptenreviews.com/

Cheers, Greg

Reply

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