The Best Property Management Software For Your Investment


Managing Commercial Real Estate with smart software can help to reduce time, help tenants, and reward investors

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The Risk of Incompatible Software

A large property owner was courting property managers to take over responsibility of maintaining their multi-billion dollar real estate portfolio.   After a long and tedious selection process, a property manager was chosen, but that was only the beginning of the difficulties, not the least of which was the software incompatibility of the property management company and the internal software of the owner.   The large property owner managed their real estate with their own internal SAP instances,  in-house data warehouse, and customized reporting.

What ensued was a slow and painful merging of software systems and processes.  There were multi-day delays in uploading documents and invoices for approval, confusion around the multiple levels of approval for that same invoice, transparency across pricing of the subcontractors, just to name a few. The transition took much longer than anticipated, so much so that all the executives of the newly chosen property management firm lost their bonuses that year, due in part to ineffective software system capabilities across vendors and owners. 

To avoid such catastrophic transitions from owners to property managers or from old owners to new owners, professionals should seriously review all the aspects of the software platforms involved. Those platforms can either make for a frictionless transition or a painfully abrasive changeover.

Available Software Suites for CRE Management

There are only a handful of well-known software suites built for private commercial real estate management.  Many general level software systems can handle property management, though with less efficiency or capacity.  Below are some of the well-known as well as up-and-coming providers for property management software:

Yardi claims to hold nearly 50% of office market share and for that fact alone, may help office transitions be less jarring.  Since its first version was designed in the 1980s, Yardi is well rooted in real estate and continues to specialize in the sector, with its newest inclusion of cloud-based Yardi Breeze.  AppFolio is a newer competitor, founded in 2006, focusing on cloud based services in the real estate sector.  They have a 50 unit minimum for their software.  DoorLoop was founded in 2019 as another competitor in the real estate management space and inclines its abilities more toward residential property management.  

Other programs, like Oracle’s NetSuite, are more generally built to help take entrepreneurs to the next level with their in-house software.  NetSuite is capable enough to handle property management as well as most other types of business, allowing customization from a broad array of templates.  

Live Demonstrations by Software Representatives

Professionals may be well served with live demonstrations of any of these software suites before they make their decision.  Most of the above landing pages funnel the visitor towards signing up for a live demo.  These demonstrations can show an interested manager exactly how they, for example, would approve an invoice from a vendor or set up automatic ACH pulls from tenants’ bank accounts for lease payments.  The demonstrator can also illustrate how to run reports for monthly financials or how to tailor access for each user.  

Yardi demonstrations do not require a minimum unit count, though the software would be expensive for a small unit business.  AppFolio does not provide demonstrations unless the business has 50 units in their portfolio.

Generally, the presenters professionally and adequately cover the bulk of the suite's capabilities, but it is up to the Manager to ask specific questions regarding their functionality needs.  For example, when a tenant submits a maintenance request, does the software send a push notification to the maintenance vendor with access to the system or just to the property manager? Or can vendors key their invoices directly into the system, or must they upload a PDF which then requires the property management to key in the figures into the system?

Capabilities

For a general understanding of the capabilities of each of the platforms, one may visit the website of each provider and review the stated functions of the software.  Many of the statements are general, purposefully so in order to funnel visitors into arranging a live demonstration with their sales force.  However a list of some of the functions of property software can be helpful:

ACH and Actual Movement of Money

Most software suites do not themselves directly send money to vendors or pull money from tenants’ accounts.  Those are done through an automatic clearing house provider to which the software system sends information.  However, most professional management systems are integrated with ACH providers such that a manager may only need to set up ACH account numbers, schedules and amount one time only, along with the electronic authorization of each vendor and tenant upon set up of the system, and set those push or pull batches to run monthly or quarterly on an automatic basis (still using the ACH provider at the back end).   Except for the initial set up, the manager won’t need to work with bank accounts directly on a regular schedule.  

Factors to Consider

Cost

Despite what may pop up on various advertisements or product placements to get clicks, most professional management software, along with invesment management software, will cost between 10-15k a year, depending on negotiations and deals.  In addition there is a set-up fee which can be between 1-3k, which is often a subject of negotiation.  

Yardi Breeze Premier, the newest product on the Yardi line-up, is built to handle companies with up to 1,000 units (either 1,000 properties, 1,000 doors, or 1,000 paying tenants) and will run you around $4,800 a year. Yardi Voyager, their company’s software for larger, institutional holdings, has a higher price tag, but as of this article's writing, is less user-friendly than the newer Yardi Breeze.  With a potential material refresh in the works to make Yardi Voyager look and feel more like Breeze, it may become just as user-friendly, if not more so, than its junior counterpart.  

AppFolio and DoorLoop advertise $2 or $1.50 per unit per month costs, but they have minimum amounts required per month, and those advertisements do not include their invoice processing services or their tenant request platforms.  Ceteris paribus, Yardi, AppFolio and DoorLoop often have final bids in similar dollar ranges. 

Investment Management Add-Ons

Within the Private Equity space, the property management and cash flows are only part of the responsibility of the manager, or sponsor. After each month or quarter, the Manager must allocate the free cash flow (or losses) to the limited investor partners according to the allocation/waterfall schedule outlined in the Operating Agreement.  An efficient manager will look for a software suite that can automate these cash flow distributions with precision and professionalism.  

Yardi’s Investment management software add-on “Investment Manager” comes at an additional cost (around $8,000/yr) to Yardi Breeze and brings with it the capabilities of automated cash flow distribution according to a customized waterfall schedule.  It also provides an investor portal on your website for investors to log in at any time to check on their investments.

In addition to the automation of distributed cash flows, Investment Manager is a CRM platform as well, allowing the Manager to keep track of investor and potential investor profiles, automate newsletters, set schedule customer contact calls, and batch email.

AppFolio and DoorLoop have their own versions of managing investment partners and CRM capabilities as well.

Ease-of-Transition 

Another factor that a manager may need to consider in choosing a software suite is that of transition ease.  Upon new acquisition of a property there may be many abrupt changes for tenants, vendors, and owners.  An experienced manager can see the value in minimizing those changes for all parties involved. One way to smooth out the transition is through consistent software platforms.  If a manager is privy to know which software system was used prior to the acquisition, he may be able to find out which platform the parties are using under the previous owners.  If it is within the manager’s preference or tolerance, he may benefit from giving due consideration to the same software platform of the previous owners, maintaining consistency and a sense of foundation for the tenants and vendors.This familiarity may even be the final push that keeps some teetering tenants from terminating their lease if there are other influencing factors.  

Of course, through due diligence interveries, the new manager can also test the satisfaction level of the vendors and tenants with the current system in place.  If the new managing firm senses a desire for change, and is comfortable with that change, it may be a perfect time to upgrade the suite in place. 

Wrap Up

To become and remain an effective property management firm, a manager/sponsor must consider their management software platform as at least an asset, and at most, a partner.  With annual subscription costs below the annual cost of a part time employee, a robust platform can not only reduce costs but also reduce management oversight, saving valuable time for other critical activities. Professional platforms, like Yardi and others, can robustly address property management challenges while smartly remaining user-friendly for most managers.

When considering which platform to use, managers would be well served to evaluate robustness, customization, cost, ease-of-transition, and simplicity.  There are many levers by which property managers can save money and reduce costs but skimping on property management software should not be one of them as it can skuttle a firm’s ability to effectively manage and grow their portfolio.  Managers would do well to choose a software platform that not only fits them well today but also can be tailored to grow with them for years to come.