Property Management Software: a Comprehensive Guide
One of the biggest challenges facing property management companies today is not the lack of software to manage their operations, but rather the willingness to implement these software solutions.
This often leads to processes being done manually, which ends in inefficiencies, errors, and a lack of transparency, hindering the growth and success of the organization. The problem is only compounded by the fact that the property management industry is experiencing rapid growth, with a revised growth trajectory in Q4 of 2022 of 9.2% from the original 8.4% CAGR in the next 7 years. That means these inefficient processes are being scaled within organizations, so the maximum potential might be overshadowed by the maximum grunt work load.
To stay competitive in such a fast-growing industry, it's critical to have the right tools in place to manage properties efficiently and effectively. Without software to automate and streamline operations, organizations risk falling behind competitors and missing out on opportunities for growth.
The solution is property management software.
Today, we'll take a look at what property management software is, the benefits of using it, and the key features to consider when choosing the right software for your organization.
In this article,
1. What is property management software?
Property management software is a tool that helps property management organizations manage their operations and automate a wide range of tasks, including tenant management, rent collection, maintenance requests, and more.
The annual growth rate for property management organizations in the past 5 years was around 7%. While, at first, this may seem like an easily obtainable growth rate, it's important to note that not everyone is able to utilize these market conditions. One major problem is the high operational costs of property management, which can make it difficult for companies to enter the market, scale, or grow.
Another problem is the lack of transparency and visibility within an organization. With so many different processes, systems, and workflows in place, it can be difficult for organizations to get a clear picture of what's going on in their business and where improvements can be made.
In addition to this, not everyone assumes that the property management industry will be growing rapidly — some estimate industry growth to be around 3% per year throughout the 2020s. Many in the industry are now turning toward software to digitize their operations to gain a strategic overview and optimize where possible to increase profits during this somewhat stagnant period.
Even with conflicting estimates of industry growth, 92% of property management organizations are looking to expand their portfolios in 2023, and property management software can help organizations do so without wrangling to scale inefficient processes along the way. By automating and streamlining operations, organizations can free up time and resources to focus on growth and serving customers.
2. Primary features every property management software needs to have
Property management software is an essential tool that can help track and monitor the finances of properties, automate daily operations, and provide a method of communication between you and your tenants.
The primary features that every property management software should have are:
- Financial tracking and monitoring: The ability to track and monitor the financials of properties is critical for understanding the health and performance of an organization. Look for software that offers detailed financial reporting and analytics, including income and expense tracking, and budgeting tools.
- For property owners, property managers, and landlords: The flexibility to meet the needs of all users, whether you're a property owner, property manager, or landlord. Look for a solution that is easy to use and offers the features and functionality you need to effectively manage your property.
- Automation of daily operations: Automate various and sometimes complex operational tasks, freeing up time and resources for teams to focus on other areas. Look for software that offers features like automated rent collection, and maintenance request tracking.
- Communication portal: Provides a simple and efficient way to stay in touch with tenants. Look for software that offers a tenant portal or other communication tools, such as email or SMS alerts.
These features ensure that an organization has the tools it needs to effectively manage its real estate properties and provide excellent service to its customers or tenants.
3. Automatic vacancy listing
Automatic vacancy listing is a feature of some property management software that allows organizations to automatically list vacancies on popular rental websites and platforms, helping them to reach a wider audience and find qualified tenants more quickly.
By automating this process, you can save time and resources that would otherwise be spent on manual listing and advertising efforts. This can free up time and resources to focus on other things like serving current tenants or growing portfolios.
It also means that as an organization grows, processes to list vacancies are scaled sustainably inside of a tenant off- and onboarding workflow instead of entire teams being employed to check properties after people move out, clean them, put them online, and help new tenants move in.
In addition to the operational benefits, automatic vacancy listing can also help organizations save money. By listing vacancies on popular rental websites and platforms, they can reach a larger audience at a lower cost than traditional advertising methods. This can help fill units more quickly and at a lower cost, ultimately increasing profitability.
4. Lease management
The global lease management market is expected to grow by a CAGR of 6.9% from 2022 to 2031, driven in part by the rise of SaaS (Software as a Service) companies. Lease management is an essential part of property management operations, and the right software can help improve this process.
When choosing any property management software, make sure to look for a solution that offers comprehensive lease management features. These features include the ability to track expiration dates, rent payments, and renewals, as well as the ability to create and manage lease agreements.
Having a tool that can handle all aspects of lease management helps organizations stay organized and on top of their lease agreements, and ensure that they are maximizing the profitability of their rental units. It can also help improve communication with tenants and keep them informed about important dates and deadlines.
Next Matter can integrate with both external and internal tools, and can turn singular integrations into fully automated workflows. That means offboarding tenants, cleaning properties, managing security deposits, finding new tenants, and managing leases can all be started at the touch of a button. Click here to learn more.
5. Tenant screening
Tenant screening software can help organizations make more informed decisions about potential tenants. According to a survey of real estate agents, 50% of respondents claim that renting a property is too difficult and not worth the low commission rates. However, tenant screening tools may be able to help turn these low commissions into easy and consistent wins.
Tenant screening tools do this by providing features such as background checks, credit checks, and income verification. These tools evaluate potential tenants and provide the information needed to make better decisions about who to rent to. This means organizations using tenant screening tools protect their properties and mitigate risk by identifying tenants who may be more likely to cause problems or default on rent payments.
6. Rent collection
Rent collection is often a key selling point for property management software, and the market for these solutions is expected to continue growing in the upcoming years. According to a recent market research report, the market is expected to hit sales of $6.94 billion by 2028.
When choosing software with a rent collection feature, look for things like automated payment reminders and the ability to accept payments online, which tend to be the most common functions used by most property management organizations.
Automated payment reminders make sure that rent is paid on time, and organizations avoid potential issues with late payments while also sending reminders to tenants before the payment is due and after if the payment is missed. Confirmation notifications can also be sent if rent has been paid to provide better customer service for tenants.
7. Maintenance and repair tracking
Effective maintenance and repair tracking is one of the biggest problems, but the most important part of property management organizations, as it helps ensure that properties are well-maintained and that repairs are completed in a timely manner — which establishes the reputation of an organization.
Most systems generate work orders, assign tasks to specific team members or contractors, and track the progress of repairs automatically. Scheduling maintenance tasks in advance proactively can help to address issues before they become major problems.
Maintenance and repair tracking is incredibly useful to have as it provides alerts when maintenance or repair tasks are overdue, so organizations can ensure that everything is being completed on time.
Automatic workflows mean that maintenance and repairs can be scheduled automatically when tenants make a report including booking appointments. Let us show you how!
8. Financial reporting
Financial reporting is a crucial aspect of property management, as it allows companies to track revenue, expenses, and profits and make informed decisions about the financial performance of their properties. However, this process is often done manually, which can be time-consuming and prone to errors.
As property management companies grow, the need for efficient financial reporting becomes even more pressing. At scale, manual financial processes can become problematic, as it may be necessary to build several regional teams to handle these tasks and this comes with an increased risk that things could fall through the cracks.
That's where financial reporting software comes in.
These systems allow property management organizations to streamline the financial reporting process and access important financial information with features like the ability to generate reports on revenue, expenses, and profits, which can be invaluable for growing companies.
We’re not the only ones who think that the financial analytics market is valuable — a resent report expects the industry to grow significantly in the coming years at a CAGR of 16% by 2028. Property management companies that invest in financial reporting software will be well-positioned to take advantage of this to improve their financial decision-making.
9. Tenant communication
Effective communication with tenants is crucial for property management organizations. However, many struggle to keep up with the demands of managing multiple properties and maintaining open lines of communication with tenants.
As a result, many organizations are simply trying to scale by hiring more people to take on this additional communication burden instead of taking advantage of the benefits offered by tenant communication software, which allows property managers to easily communicate with tenants and resolve issues quickly by triggering automated workflows for simple problems with established protocols, improving the overall experience for both parties and reducing the amount of work that needs to be done about work.
So, why aren't more companies using tenant communication software?
One reason could be that they are not aware of the benefits it offers as property management organizations have been notoriously slow to pick up on current digital innovations, which means companies who do take advantage of digital tools can scale faster while saving money on operational costs.
10. Marketing and advertising
Most people are familiar with marketing and advertising, but, unfortunately, most small businesses fail to utilize this software to improve their reach, leaving organizations behind other others who do.
Consider the case of the owner of a small property management company with a portfolio of ten rental properties:
This business has always managed its marketing and advertising efforts manually, using a combination of word-of-mouth referrals, social media posts, and local newspaper ads to attract new tenants.
While their approach has been somewhat successful, they know that they could be doing more to reach potential tenants and generate leads. They’re also aware that the property management industry is becoming increasingly competitive with 43% of homebuyers looking first online for their new home instead of going to a realtor or looking on social media or newspaper ads, and they want to find a way to stand out from the competition.
So, the small business decides to invest in marketing and advertising software. They researched a few different options and ultimately settled on a system that offers a range of features, including social media management, email marketing, and pay-per-click advertising.
After implementing the software, they’re amazed at the difference it makes for their business. With the ability to target their marketing campaigns to specific demographics and track the results, they can generate leads more effectively and reach a wider audience. They also find that the software makes it much easier to stay up-to-date with the latest marketing trends and techniques, which helps them to remain competitive in a rapidly evolving industry.
11. Lead tracking
While lead tracking sounds intuitive, we can take the same example of the small business above and see what a difference it would make by implementing software that takes care of the manual work.
We can imagine that, as the small business grows, they find that keeping track of leads becomes more and more challenging. With so many potential tenants reaching out through various channels due to their recent implementation of marketing and advertising software generating a significant increase in interest, it becomes difficult for them to keep track of who has expressed interest in their properties, which ones they’ve already contacted, and which ones are still in the pipeline.
That's why they invest in lead-tracking software. After looking online, they get a tool that offers a range of features designed specifically for property management companies like the functionality to create profiles for each of their leads, including contact information, rental history, and any other relevant details. They can also track the status of each lead, so they know which ones are ready to move forward and which ones need to be followed up with.
One of the most valuable features of the lead tracking software is the ability to automate follow-up tasks. They can set up automatic email and text message reminders to remind leads of upcoming appointments or deadlines, which helps to keep their pipeline moving smoothly.
Overall, they find the lead tracking software is a game-changer for their property management company. It helps them to stay organized and focused as a small team, and it saves a significant amount of time and effort. They can close more deals and build their portfolio more quickly thanks to the software.
12. Security deposit management
Managing security deposits can be a tedious and time-consuming task, but one former tenant will remember when writing a review about your organization, so it’s important to get it done correctly. Some of the difficulties result in a variety of different tasks related to security deposit management from tracking and collecting deposits from tenants to ensuring that they are returned in a timely and accurate manner. It's easy to get overwhelmed by the paperwork and logistics involved.
That's where software solutions can come in to help. With a reliable and user-friendly solution, organizations can streamline their deposit management processes and save time, effort, miscommunications, and future headaches.
Some of the key automations include tracking deposit payments and generating deposit return letters, freeing you up to focus on other aspects of your business.
Another advantage of security deposit management software is the increased accuracy and transparency it provides. With a clear and concise record of all deposit transactions, organizations can avoid misunderstandings and disputes with tenants. This is especially important when it comes to returning deposits, as organizations need to be able to provide a detailed accounting of any deductions taken.
One leading deposit management company claims to have saved people over $1 billion through its software solution.
Next Matter can manage security deposits with workflows that are triggered when tenants put in their notice. Book a demo!
13. Document management
Organizations are wasting dozens of hours each week searching for lost and misplaced documents and struggling to keep track of all the paperwork that comes with managing properties, which is why many have introduced document management software.
With a reliable document management solution, all important documents can be stored and organized in one central location, accessible with just a few clicks.
Not only does this save time and frustration, but it also improves the security of an organization’s sensitive financial and personal information with authorization keys, so only certain people or team members can access the information.
Want to know more about real estate automation software and how it can impact your business? Check out our latest article, "The crucial importance of workflow automation for real estate businesses."
14. Customizable workflows
As a property management professional, you know how important it is to stay organized and on top of things. The industry is complex and fast-paced, with many different tasks and responsibilities to juggle at the same time with little room for mistakes.
That’s why we’ve introduced several software tools that can help you understand digital innovation better for property management organizations. But, there is something missing to hold all these software tools together:
Workflow management and automation software
Workflow management software starts by automating operational processes to save time, reduce errors, and improve efficiency. Using a workflow management solution can build organizational resilience in uncertain times while ensuring processes are efficient and effective, even in the face of challenges.
Here are just a few reasons to add workflow management and automation to your software tool kit:
- Increased efficiency
- Improved accuracy
- Better collaboration
- Enhanced customer service
- Reduced costs
Workflow management and automation software is easy to implement and can have a significant impact on an organization’s efficiency.
15. Combining property management software with workflow automation and management software
With the increasing demand for rental properties and the competitive market, it's crucial to have streamlined processes in place to ensure a business is running smoothly and effectively. That's where workflow management and automation software like Next Matter comes in.
Before implementing Next Matter, a team may have been struggling with manual processes and disjointed communication, leading to mistakes and delays. But with Next Matter, an organization can easily document and digitize its workflows, creating an environment for better communication and collaboration among team members.
To get started with Next Matter, an organization will first bring together key members from each department and discuss their current workflows and pain points. From there, they can work together to document these processes and identify areas for improvement.
Once workflows are documented and digitized, they’ll have a clear and concise view of how tasks and projects are moving through their organization. This increased transparency allows for better communication and helps to eliminate bottlenecks and inefficiencies by adjusting workflows based on problems spotted during this process.
In addition to improved communication and efficiency, Next Matter also offers the ability to automate certain tasks and notifications. This can save your team a significant amount of time and allow them to focus on higher-value tasks.
Want to see how you can create harmony among your teams and software tools while riding the next few years of growth in the property management industry?
Book a demo!
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