Selecting the right property management software is critical to a property management company’s success. In my book, “50 Interviews: Successful Property Managers” – Volume 1, Nat Kunes describes how a property management company should go about doing this.
Part 1 of 5:
Selecting the Right Property Management Software
Property management laws, regulations, and accounting standards are changing rapidly and are becoming increasingly more stringent. Choosing and investing in the right property management software is now more important than ever. However, choosing and evaluating software can be a challenging process for many property managers.
In this article, we will discuss the past, present, and future of property management software – how the industry has evolved and where it is going. We will show you why and when you need property management software, and help you understand how your business can benefit from the right choice. We will also provide guidance on the features that really matter (including a handy checklist to use when evaluating products). And finally, we will provide some suggestions on where you can look for help finding the best solution for you.
Property Management Software Market Overview
Property Management Software has come a long way over the years. In the early 1980’s property management software was slow and cumbersome, running on early personal computers. Today, the choices are vast and feature-rich, and many providers now offer property management software as a web-based service.
In the 1980’s there were only a handful of companies offering property management software solutions. This quickly changed in the 1990’s as dozens of different companies were launched to provide software solutions to property managers. More recently (over the last decade) we have seen a sharp retraction in products as the larger software providers purchased smaller companies. The landscape has consolidated back to only a handful of providers, resulting in fewer choices for property managers. In addition, many of the remaining software providers have focused their product development to serve the larger property management companies and real estate investment trusts, leaving the smaller and mid-sized property management companies underserved. However, the good news is that in the last couple of years a few companies have been launched to address this need.
Two Primary Types of Property Management Software: Premise and Web-based
Property management software can be divided into two main camps: premise based or web-based. Premise based software is run off of a local computer with a database, and typically the computer is located in the property management office. The property management company purchases and owns the software and is then responsible for keeping the computer up and running and backed up daily. Usually the premise based software provider charges an annual maintenance fee, which means they will be available to fix any problems with their software only, not the machine running it.
Alternatively, web-based software can be accessed from anywhere in the world with Internet access. It also is fully maintained by the software provider, so there is no need to maintain a server running in the office.
Another distinction in property management software is the option for integrated accounting. Some software solutions have built-in accounting to create a one-stop solution. Property management software providers without this functionality require that you buy an additional accounting program (like Quickbooks) to get the accounting features. This can be expensive and some property managers find that getting the systems to sync up can be time consuming.
Depending on the size of the portfolio you manage, different features may be more or less important. It is important to think about how your business will use a specific feature – a long list of features may not be needed for your business. And too many features can make the software difficult to use and cumbersome to learn for your staff.
Another point to keep in mind is the type of portfolio you manage will affect your purchasing decision. A commercial property manager will need a different set of features in a software solution than a residential or homeowners association property manager.