Three Things to Look for in Property Management Software
For the typical landlord, building wealth through real estate requires two things broadly: implementing and acting on a sound investment strategy, and effectively managing your rental units. The two are not mutually exclusive, at least not by design. But unfortunately, for many landlords, they become just that.
If you spend all your time managing properties and tenants, you’ll have little time to source and analyze potential investments. Your portfolio will stagnate, or you’ll cut corners and wind up with poor investments. But if you focus only on investing and you neglect your tenants, you’ll pay for it in property damage, evictions, deflated rental prices, and a host of other headaches.
As a result, many landlords turn to property management; however, finding a good property manager can be difficult. Good or bad, property managers are expensive – typically anywhere from 7-10% of rent. It’s not impossible to make these numbers work, but it depresses your cash flow and makes it more difficult to save for additional acquisitions.
But it’s not all doom and gloom – there are alternative ways to have your cake and eat it too. Modern property management software has enabled landlords to strike the perfect balance between tenant management and investing. By automating management processes and providing landlords better access to their data in an organized manner, property management software can help landlords continue to grow their business well beyond their capabilities alone.
Below are three ways property management software can help you build your property portfolio.
Screen for Better Renters
If you’re not already screening your tenants, you absolutely should be. Local property management software startup Innago notes that here in Cincinnati, if you add up the cost of filing an eviction, turning over your unit, and rent lost due to vacancy, getting rid of a bad tenant will typically run you a minimum of $1,000 in hard and soft losses.
Screening tenants is one of your most effective tools in ensuring you’ve got the best possible renters. Credit, criminal, and eviction reports can tell you a great deal about how a tenant will behave once you hand them the keys to your apartment.
But tenant screening services are not exclusive to property management software. Good software will, however, make those records easier to access and store in a single place. What’s more, you’ll likely be able to send and sign a lease, start collecting rent, and manage the unit with just a few clicks from there, simplifying the entire rental process from start to finish.
Collect More Rent Faster
One of the greatest benefits of online property management software is the ability to collect rent online. No more paper checks, no more running to the bank. It’s an efficient and simple way to manage a task that often becomes a tedious monthly chore.
But what many landlords don’t often realize is that online collection can also help improve your collection timelines. Firstly, convenience matters to your renters. Most software will send them reminders when rent is due and allow them to easily submit a payment from their couch. They can also likely sign up for auto pay with multiple payment methods. As a result, you’ll have more tenants paying on time or early.
Further, automating late fee enforcement can make a huge difference. It’s one thing for you to call your tenants up and tell them to pay you a $50 late fee. It’s another thing for a faceless system to force them to pay their late fee before they can submit their next month’s rental payment.
As a final note, some rental management software can move the funds into your account exceptionally fast. If it’s important to you, you should have options for funds delivery after as little as one single business day. This isn’t true for all platforms, so be sure to check!
Digitize Real Estate Record Keeping
Landlords often purchase their first rental property with the best of intentions when it comes to accounting and record-keeping. But it is often one of the first corners that gets cut as life gets busy. Receipts get thrown away, expenses don’t get properly recorded, and deposits aren’t itemized properly.
The main reason for this disorganization is inconvenience. If you have a binder in which you keep your receipts, you have to remember to sock it away there. For this reason, by simply making it more convenient to do, property management software can have a huge impact on your book-keeping.
What’s more, property management software will likely provide a simple way to collect data in organized and effective reports. As a landlord, you’ll no longer need to spend time applying formulas to excel files and copying and pasting large amounts of data. With a few clicks, you’ll be able to analyze your properties and your investment strategy. Taxes and your month-to-month management will both be easier than ever before.
Screening tenants, collecting rent, and organizing your record keeping are just three ways property management software can help you. There are a tremendous number of additional features available from a wide variety of companies. Many include digital document signing, communication tools, maintenance management, and much, much more.
If you’d like to continue growing your property portfolio, or you’d simply like to ease your workload in managing your tenants, property management software can be a huge asset for you. Understanding how it can help can also assist you in evaluating which platform will be the best fit for your business.