The Definitive Guide to
Property Management Software
Managing multiple properties can be overwhelming. Property managers and owners juggle many tasks, such as tracking rent payments, keeping up with maintenance and finding new tenants.
The solution: property management software. And that’s where our buyer’s guide comes in.
Here, we provide an overview of property management software and then break down its features, the benefits and challenges, and what to look for when making a purchase.
Property Management Software Overview
Property management software is a solution that helps real estate and property management firms track all functions associated with their properties. These functions include advertising rental properties, gaining new tenants, collecting rent payments and property maintenance. Property management software was traditionally deployed on-premise (on the company’s servers and computers) but in recent years, many vendors have started to offer cloud-based deployment.
Some common types of properties that can be managed with these solutions include:
- Residential: includes apartment buildings and houses as well as single-family and multiple unit properties
- Commercial: includes office buildings, retail sites, factories, etc.
- Homeowner’s Association (HOA): intended for condominiums and townhouses that have a homeowner’s association
- Hospitality: includes hotels
- Student housing: houses or apartments dedicated to off-campus college students
Although most property management software shares common features, niche-specific software may have features unique to a specific industry. For example, a hotel-oriented software can include guest check-in/check-out functionality.
Most property management software has scalable pricing plans based on the number of units in a property portfolio. For example, Rentec Direct has a free account (Rentec Basic) for managers and owners that oversee less than 10 properties.
Who Uses Property Management Software?
Property management software is generally used by property management and real estate companies.
Property management firms usually employ a property owner (landlord) who’s involved in the day-to-day operations of each property. Property management firms use software to keep track of profits, expenses and marketing of properties, while property owners benefit from the software to keep track of maintenance tasks and ensure tenants pay their rent on time.
Real estate investors (such as homeowners who rent out more than one property) also benefit from a property management solution. Because the solution automates many tasks, they don’t have to rely on spreadsheets or paper to manage their properties.
Property management software includes many different features. Depending on the vendor, some features may be included in the software, while others can be optional or not included at all. Here are some of the most common features:
Accounting features – Many property management software includes accounting functionality such as tracking payables and receivables, bank reconciliation, tax filing and electronic funds transfer. The accounting features are either built into the solution, or the solution can be integrated with a third-party accounting system (e.g., QuickBooks).
Lease management – Property management software has features that help with the leasing process, such as property marketing, rental applications, document storage and electronic signatures. By using lease management features, property managers and owners have an electronic trail documenting the entire leasing process, which saves paper and time.
Maintenance management – Also known as work order tracking, maintenance management helps owners keep track of property maintenance and any maintenance requests from tenants. Maintenance requests can be submitted via the software, and it can also schedule recurring tasks. Property managers and owners can assign work orders to vendors/employees, track maintenance progress and make payments to vendors.
Rental listings – As a way of marketing their properties, managers and owners can post rental listings to various real estate websites straight from the software. Such websites include Zillow and Trulia. Some vendors (e.g., Propertyware) have a dedicated website creation service as another way to advertise rental properties.
Owner portal – An owner portal is for property managers and owners to perform tasks such as sharing documents, collecting rental payments from tenants, accessing information on financial performance of a property and more.
Tenant portal – With a tenant portal, tenants can pay rent online, submit maintenance requests and get in touch with landlords. Tenants can access the portal either via the web or their mobile devices.
Tenant screenings – Because background checks on new tenants are important, property management solutions help property owners conduct tenant screenings. Some vendors offer general background screenings (such as address history, criminal records or credit history), while others offer more specialized screenings (such as FICO scores or past eviction records) for an additional price.
Using property management software has several benefits, including:
Reduced administrative work: Before using property management software, property managers and owners kept track of their properties either via paper or spreadsheets. This could get time consuming, especially with managing multiple properties and keeping track of every tenant’s rent payment.
Faster payments: As many property management software solutions have accounting features, property managers can easily review invoices to be paid or rent to be collected. Alerts can be created as reminders to pay an invoice or track down a tenant for rent payments. Also, property management software can be configured so tenants can make their rent payments online.
Better communication with owners and tenants: More property management software solutions are including collaboration features so property managers can reach owners and tenants easily. One such feature is an online portal where tenants can schedule maintenance requests or contact the landlord.
More efficient leasing process: When advertising a property’s availability, a property manager lists it on a real estate or apartment rental site. The manager likely has accounts with several of those sites, and keeping track of each can be cumbersome. With property management software, the property can be listed on several sites (such as Zillow, Trulia or Craiglist) at once. The property manager can also review applications and respond to questions straight from the software. Some property management software solutions also include e-signatures or lease templates that can be sent electronically.
While a property management software has its benefits, it also comes with challenges, including:
Resistance to change: Using any new software involves a learning curve, which can be tough for property managers and employees. Although some property management software solutions can integrate with an accounting system like QuickBooks, not all of them do. So prospective users will have to learn how to work with the accounting features within the software – and they may not be willing to give up their old accounting solution.
Resistance from tenants to using self-service functionality: Many property management software solutions include tenant portals or a mobile app so tenants can submit maintenance requests or communicate with the landlord. While many tenants may appreciate having self-service functionality, some may see it as an inconvenience.
Cost: Investing in property management software is beneficial in the long run, but it can be costly to purchase. It can be more expensive for property management companies that manage 100 properties or more rather than a smaller business with a few properties. That’s because larger companies would need a solution with more advanced features. Also, some features, such as running background checks on tenants, are optional and cost extra. We discuss more pricing factors to keep in mind in our “What to Look For” section in this guide.
Concerns over security and privacy of data: As with other software, strong security features are a must. Property management firms that aren’t used to working with software may have concerns over data security, especially with cloud-based solutions. Those businesses may prefer an on-premise version where data is housed and maintained within a business’ servers.
Like other software, property management solutions experience changes. We’ve listed a few new market trends below:
Growing global demand: According to MarketResearchReports, the global property management software market is expected to experience a compound annual growth rate (CAGR) of 6.7% by 2020. A main factor driving this demand is that property managers and real estate agents need to handle a large amount of data collected from multiple sources. Property management software also provides them access to proprietary data. Also, the rental market is growing, which will attract new property managers that will likely need software. In fact, according to REAL Trends, over 42 million households are now renting instead of buying homes.
Mobile functionality: Many property management software vendors are offering mobile functionality either via a web browser or mobile app. Property managers often conduct business away from their desks, so having access to data such as financials or work order status is important. Tenants can also access a dedicated portal straight from their phones or tablets.
More advanced technology in tenant background checks: Background checks for prospective tenants typically focus on the applicant’s credit history, rental history, employment and any criminal records. However, background screening technology is starting to get more sophisticated. Property managers and owners have the ability to conduct more in-depth background checks. This includes empirical scoring methods that provide a single score on each applicant to determine if the person passes or fails based on credit, criminal and other history.
Before purchasing any property management software, it’s important to figure out what features you’ll need.
Perhaps you only require a few specific features or need a full-featured solution. Or you’d rather deploy the solution in the cloud than on-premise. It’s a good idea to have a checklist with requirements and questions to ask before looking at vendors.
Be sure to consider these key factors before making a purchasing decision:
Cost – Property management software is offered at many price points. Many vendors provide scalable pricing plans that include more features for a higher price. When comparing prices from different vendors, be sure to take the various deployment methods into account. Cloud-based solutions are often cheaper than on-premise software. It’s also important to know if implementation, support and training services are included in the base price of the software or are additional fees. Keep these factors in mind when asking for a price quote.
Scalability – Are you planning to expand your property management business, or do you anticipate having property owners and tenants accessing the software? If so, you’ll need a solution that can scale up or down to fit your needs. You’ll also want to ensure the software can accept as many users as possible (or even an unlimited number of users).
Ability to work with existing systems – If you’re considering an on-premise software, it’s important to find out whether it can integrate with existing hardware or servers. Also, if you’re switching to a different property management software, you’ll want to make sure the vendor offers data migration services.
Input from users – All affected parties need to buy-in to the new solution, including top executives and property owners. One way to do that is to get them involved in choosing the system – for example, have them participate in software demonstrations.
Demo of the solution – Getting a demonstration of the solution can help you see how it works – and how it can fit into your company’s operations. As another way to test the software, some vendors offer a free trial before purchase (typically 30 days).
Training and support during and after software implementation – Know all the details about training options during implementation. Can the solution be easily used by non-technical people? If not, does the vendor offer additional training? Choose a vendor that can provide training at your convenience, if possible – for example, having a rep conduct training sessions for multiple users onsite. Also, make sure the vendor provides support after the software is deployed, such a 24/7 tech or customer service support via phone or online.
Request to speak with vendor’s current or past customers – It’s important to get references from a vendor’s existing or previous clients. The vendor will give you the names of clients with good experiences, but ask for companies that have similar needs to yours (e.g., managing residential properties or working in a similar industry niche). When contacting the reference, ask if there have been any issues with the vendor or the solution. You’ll want to get input on not just the positive experiences, but any issues as well.
Top Property Management Solutions
To help narrow down your search of property management vendors, head over to our reviews page, where we’ve profiled some of the most popular property management solutions.