The right software can help you run your real estate business more efficiently. But how do you know the difference between useful features and bells and whistles when choosing a software package?
Experts say that sticking to the KISS (Keep it Simple, Stupid) theory will allow you to buy a “right-sized” software package to meet your real estate business requirements.
This Tech Tools column will offer tips on how to get what you’re looking for when choosing real estate software.
One Size Doesn’t Fit All
It’s crucial to determine your needs before searching for a software package, as one size doesn’t fit all. Simpler is usually better, according to Joshua Dorkin, founder and CEO of BiggerPockets, a real estate networking and information resource site.
“At the end of the day, users should look for software that helps them more easily run their business in a cost-effective manner. Most people won’t need all the bells and whistles. Ignore that and look for something that does the job and has limited complexity,” he says.
The accounting program QuickBooks is a great example of a program that works well and doesn’t try to do too much. Your Castle Real Estate uses QuickBooks to run its six offices and more than 400 agents in the greater Denver area. It does the job but doesn’t confuse with complexity, according to Charles Roberts, the company’s president and owner.
“Every couple of years, we look at potentially moving over to some of the industry’s leading software products that most, if not all of our competitors use, and we go, ‘I don’t know. We’re getting everything you are, and we’re doing better than you are, so we don’t really know why we need to cut over.’ And so we haven’t.”
Real estate professionals have many avenues for finding new software for their businesses, including trade shows, checking with colleagues and software review sites. Software Advice (softwareadvice.com) is a site that helps visitors choose among hundreds of software solutions in dozens of categories. The service, owned by information technology research company Gartner, also provides free phone consultations to help users narrow their options and publishes user reviews online.
Investor Software: Excel or …?
When it comes to what platform to use to track their investments, the question for real estate investors is a simple one: Does anything beat Excel? Easily customizable, Microsoft’s ubiquitous spreadsheet program is a popular choice for investment tracking and analysis. Plus, it’s a tool that investors already own and are likely to be familiar with.
“Most investors I’ve met do one of two things: They keep track of their portfolio on a pad of paper, or they use Excel,” says Dorkin. “The sophisticated ones tend to go the spreadsheet route.
“I think that experienced investors like the ability to customize the way they run their businesses. They are typically savvy enough to do that on Excel; doing so allows them the flexibility they want with the price they are looking for.”
Roberts, of Your Castle Real Estate, is an Excel aficionado. While he’s seen investment tracking software designed for small investors like himself, Roberts “has no use for it,” he says. Instead, he uses a spreadsheet template that a colleague put together.
“It’s a pretty simple but very powerful spreadsheet to analyze the return on properties,” he says. “I could, but I don’t [use dedicated software]. I know what my basic cash flow is. I do my taxes once a year. So, as a really small investor [Roberts has 14 properties], that’s really all I care about.”
For investors wishing to try another investment tracker, there are numerous sites that offer both free and paid tools, including BiggerPockets. The site’s Rental Property Portfolio Tracker is a free tool that allows users to track “their deals in a professional manner,” Dorkin says.
BiggerPockets also has “calculators for flippers, wholesalers and potential landlords that not only help them qualify opportunities, but also help them present to financiers with professional reporting capabilities,” Dorkin adds.
Property Managers Use the Cloud
Few areas of real estate have benefited more from real estate tech than the property management industry. Gone are the days of metal file cabinets containing owner and tenant files; this information is now stored in the cloud.
Birdy Properties of San Antonio used to have separate software programs for accounting, contact management and tracking. Now, the company uses cloud-based Propertyware to handle those functions. Property owners, tenants and the staff at Birdy Properties enjoy the convenience the software provides, according to David Birdy, director of business development.
Among other features, owners can access the system to see when the rent was paid. “They can see if they had any invoices this month for payers, and of course, the proceeds are right there that we deposited into their bank account for them. It’s all right there at their fingertips,” says Birdy.
Tenants can pay their rent via an automatic checking account debit or at Walmart, which frees up staff time, Birdy adds.
While others in the office appreciate the software’s reporting features, Birdy is impressed by the program’s contact management features. Each house or unit has a tab that contains the owner’s information and all the correspondence Birdy has had with him or her. Paper documents can be scanned and associated with an owner or tenant for easy retrieval—applications, lease agreements, contracts, insurance, even the pet agreement.
“Of course, everybody’s in the database, too, so if I need to tell every single one of my owners this one fact, it’s like one email, all owners, send, boom, gone!” Birdy says. “I can’t imagine doing our job now without it.”
Whether you need an everyday program like Excel or a dedicated platform like Propertyware to help manage your business, stick to your laundry list of needs so you don’t buy an expensive, bloated package that will confuse and confound you down the road.
Dorkin of BiggerPockets suggests not obsessing about finding the perfect software for your business, especially if you’re an investor, as finding a good enough package will work for most people. “To succeed in real estate investing, you have to get out there and do the work; there’s no substitute,” he says. “Before you invest in software, learn the fundamentals of the business and do a few deals on your own. That will give you the education you need to know what tools you will need.”