This article discusses the features of a property management software, and the advantages that accrue to a manager or to the owner of the property as a result of using the software.
Property managers are responsible for the maintenance of real property. People who invest in residential and commercial property, rarely have time for the maintenance and the upkeep of the same. Since good management is essential for maximizing the return on investment (ROI), property managers are hired by investors for handling the logistics of investment.
A property manager is expected to handle a multitude of tasks, viz. rent collection, maintenance of the property, keeping track of vacancies, and reporting income and expenses. This is where property management software can come in handy, and help managers and investors execute business operations with efficiency and ease.
Features of a Property Management Software
Generally, the following modules are included in every property management system: property/unit management, general ledger, accounts receivables, accounts payable, budgeting, client/tenant management, management fees, bank deposits, bank reconciliation, work orders, job cost, purchase orders, inventory, late fee processing, past due letters, built-in word processor, user defined fields, calendar/reminders, owner payments, special assessments, e-mail, rent geared to income, vendors, export data, security management, and custom reports. Each of these modules can help the user execute various aspects of the job with precision.
A property management software is versatile and can be used to manage both residential and commercial properties. Condominiums, multifamily homes, public housing, mobile homes, townhouses, non-profit housing, and even commercial properties can be easily managed using a standard property management software.
One must bear in mind that a software for commercial property management may have a few other features that may not be included in a software that is meant for managing residential property. People are generally given a free demo of the online management software. This can be used as the basis for deciding on the appropriate property asset management tool.
A property manager is required to keep track of details, like income from rental properties, Total Cash Flow (TCF), and vacancies. The manager is also required to prepare financial statements, maintain records and generate reports, and file (or help the landlord file) tax returns. A good software for property management can help the manager keep track of all the details without having to painstakingly calculate the values.
For instance, Gross Rent – Vacancy Charges = Gross Operating Rent
Gross Operating Rent – Operating Expenses + Operating Income = Net Operating Income
Operating expenses include repair and maintenance costs, taxes, insurance premium, management fees, and legal fees. Operating income refers to late fees levied on the tenant, parking fees, income from vending machines, etc. The rent paid by the tenant is adjusted for these items and vacancy charges to arrive at the Net Operating Income (NOI).
The product ‘Fair Market Value of the property (FMV) × Capitalization Rate‘ should be less than or equal to the NOI calculated in the previous step, otherwise, it may mean that either the manager is not doing a good job of managing the property or the investment was not profitable in the first place. Either ways, this spells trouble for the property manager. This example would have clearly illustrated the need for a property management software.
Advantages for the Tenant
Using a software for managing property can be highly advantageous for the tenant, since the software allows tenants to pay the rent online. The tenant can pay rent using recurring ACH, eChecks, or credit cards. This facility is offered at a discounted price and most property management systems will have this feature. If not, the property manager can always download this supplementary feature at a reduced price.
A landlord can use a property management software for finding the rental yield, which is a measure of the profitability of the investment. Without a suitable yield management software, the landlord may have to use the following formula to compute the rental yield: Rental Yield = (Net Rent × 12/Purchase price) × 100. Thus, a property management system is indispensable for ensuing ease and quality of management.