How to Really Know If You Need Property Management Software
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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 (to learn more about Buildium, click here). 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.
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.
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