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Choosing Property Management Software the Smart Way

Face it, you don't need more headaches - property management is hard enough by itself. Now you have to find a good software program to get your growing business organized. Hand scribbled notes and mountains of paper are a thing of the past -- hopefully.

Note: If you are a huge property management company with thousands of rentals, maybe you should stop here. Sorry, but you may be doomed to buy a software that costs many thousands of dollars (or tens of thousands), and requires constant training of your employees. It's great that you are successful, and we wish you the best, but this article focuses on the smaller property management company or property owner, and how to save them time and money.

Should I go for online software or desktop software?

There are a lot of things that are better online. Property Management Software isn't one of them. That is the reason the Tenant File is not an online software - it is a 'desktop software'. By the very nature of the word, that means your sensitive business information is sitting on 'your' desktop, not somewhere else in the world.

Here are the top reasons why you should buy a DESKTOP software for your Property Management business:

#1 Security - All of the financial information for your Owners and your Tenants are in YOUR possession.  Can you really trust that there won't be a breech of security wherever your data is located? Do you know where it is? At least if it is on your computer you can insure that your precious data is in your trust, not a stranger's. It is just too valuable to take a chance!

#2 Down time - Ever think about what happens when power goes out? Your business is dead. No accounting for Tenants or Owners. At least when you control the data, you can run on a generator. But you can't control what happens in India or San Francisco or wherever your data is located. When the Internet goes down, your business is at a standstill. Could you accept that for days or weeks?

#3 Speed - The secret you are not told about web based software is that is works slower than desktop software. Sometimes much slower. Every bit of information stored has to be transferred to what ever state or country your data is located in, then sent back to you. It is frustrating.

#4 Cost - A 'small' monthly fee sounds good, huh? Well, add it up. If you are paying the 'minimum' of $20.00 per month, you are really paying $240 PER YEAR, and you never even get to own the software! Throw in a another 3 years and you will have paid $960.00 for the 'use' of the software, and the rates will probably go up after you are 'locked' into the purchase.  They say you can cancel at any time, but what happens to your data?

There are many other reasons why your business should rely on a stable, tested, desktop software. You valuable data is the backbone of your business. Don't take a chance on your business with a web-based software that has only been in business a few years!

What is the research on the safety of your data?
Not as secure as you are being told. According to Forrester Research, a whopping 27% of companies using cloud computing had at least one disaster within the past 5 years! You

may think that you only have to worry about earthquakes, floods, hurricanes, fires and tornadoes, but the truth is that most business data disasters happen without warning and

are devasting to your company. The primary cause? Mainly IT and network failures and power failures at the server banks hosting your valuable data. Some of these data banks are managed overseas and sustable to hacking and intrusion.

A Forrester Research article (updated 11/21/2011) says "Clients/customers should understand that cloud computing also can fail and result in major disaster for the business. The notion that it is absolutely safe on cloud is wrong."

Numerous reports have stated that the US power grid and IT infrastructure is vulnerable to terrorist attack. Imagine what would happen if all of the sudden your business data is

not accessable, with tenant, vendor and owner records, banking information, all gone in the blink of an eye?

Get the important stuff first, and then sweat the details

You can rule out 50% of the property management software on the market if you focus first on what you 'really' are looking for. The two main mistakes many people make is (1) buying software that is overkill for their needs (thus wasting money and time) or (2) going for the cheapest alternative and getting software that has defects and doesn't fit their needs (thus wasting money and time). Let's look at the differences:

Overkill: Do you need software to manage your properties and your office too? Let your property management software do what it does best - manage property. For your office accounting and payroll, there are plenty of inexpensive products that are perfectly good for both large and small businesses. However, if you use another accounting software for your office expenses, you may want your rental property software to export your bank deposits and checks to your office management software. Other features that add to the cost that you may not need include budgeting and forecasting, double-entry accounting, asset and liability accounting, and tenant background checking. Some features, such as tenant background checking are really done by well-known Internet companies, but the software vendor just buys the service first, and marks up the cost to you. The prices for property management software can range from $100 to $10,000 (or more), so don't buy more than you need. However, if you do buy a version that supports a smaller number of rental units, make sure that you can easily upgrade to the larger version at a reasonable cost (hopefully the difference in cost between that smaller and larger versions) and won't be required to re-enter any of your precious information again.

Underkill: Anybody with some web software can make an impressive looking web site. But underneath may be a piece of junk software. Look at the product, make sure you can run a full demo, and better yet a 'trial version' that allows you to 'try before you buy'. Make sure the software can do the basic things you need:

 (1) Maintain a separate ledger for each Tenant and each Owner. Your software should preferably not only be able to keep separate accounting for each Tenant and Owner, but also each Property and Rental Unit as well. Look for a system that doesn't require for you to go to a different screen to get this information. Your data should all be one or two clicks away. Look for a software program that has lots of space for you to enter notes regarding your Owners, Properties, Units, and Tenants.

(2) Write bank checks and deposits at a minimum. Better yet, make sure you can reconcile your operating account within the program. Look for little things that make a big difference, like the ability to clear all pending checks at once without having to clear them one by one. You should be able to print your checks at any time, not when a set accounting period is finished.

(3) Maintain a Vendor File. A Vendor File will keep important information about your contractors, vendors, and anyone you make payments to. Look for plenty of room for information and hopefully lots of note space for each Vendor.

(4) Automatically post rent, management fees, and late fees. You have better things to do than make redundant posting entries. Your property management software should be able to post all of your rent charges and receipts in seconds, and calculate the management fees automatically. Look to be sure the late fee posting handles the specific way you charge your own late fees. Many programs also can post other recurring fees automatically, such as parking fees, one time charges, special taxes and more. Make sure your program is flexible enough to do that.

(5) Reporting that is simple to use and offers choices. Don't let your software dictate the date period for your reports. Make sure you will be able to enter the reporting periods yourself, whether it is for a day, a week, month or year. Some programs have the ability to export the reports to other programs, such as a spreadsheet, word processor, or text files.

(6) Easily update your information. Make sure the software will handle a mixture of single family homes, multifamily homes, condos, and commercial without having to buy extra modules. Look for the ability to purchase add-ons, such as work order modules, online rent payment modules, or tax related modules -- you may need them in the future as your business grows. Be sure to check the cost of the options first!

Then, go for the details

Some things may not be critical in your property management software, but are great to have. These are features, such as a reminder system to keep track of appointments, log conversations and interactions with your tenants, and to pop up a list of tenants and owners that owe you money. Look for the ability of the software to transfer your tenant information to an inactive file, so that you can later look up your tenant info for credit references and to log back payments. Look for features such as the ability to automatically update rent amounts, automatically post amounts to each ledger, and to update your account names. Speaking of account names, you might want to find a software that uses 'real' names for your accounts like 'Rent Received', instead of an account number, such as '300021 - Rent Received'.

Don't take the Technical Support bait

Free Support! Most tenant management software companies don't even offer it, but even if they do, there may be big conditions. Some vendors force you to buy their expensive software updates in order to receive their technical support. Others offer free support for a short period of time then charge anywhere from a dollar per minute (with a minimum amount per call) to well over $100.00 per hour for support. You should get at least a 60 free support plan as part of the purchase, but better yet find an experienced vendor that offers free support for all recent versions. Yes, there are actually some vendors that back their products with free phone and email support.

Hidden costs

If you spend a frustrating hour doing battle with your property management software, what is that worth in dollars? Difficult, unfriendly software costs you time. And, if you have employees trying to figure out how to do something, you are paying them to read the 2-inch thick manual, and paying again if they have to call for support. Make sure your software program is easy to install, easy to use, and has plenty of help. You should always receive a printed user's guide with the program, a comprehensive built-in help file, and an online help page. Another big cost is the 'update'. Are you forced to buy it even if you don't need the new features? What have the last 5 updates cost the current users of the software? Will you still receive any technical support if you have an older version? Can the program be networked with other computers 'as is', or do you have to buy expensive network 'seats' for additional users? Does the program allow you to install the software at home, and let you transfer the data between home and office?

 These are important questions you should always ask when shopping for property management software. Follow these simple guidelines, and your property management software investment will help your business run a lot more efficiently, smoothly, and stress free.