Apartment Management Software
BuyerView | 2014
Every year, Software Advice talks with thousands of apartment managers looking for the right software to manage their properties. Such interactions provide unparalleled insight into their unique needs and motivations.
We recently analyzed a random selection of 385 of these interactions to uncover buyers’ most common pain points and reasons for purchasing new apartment management software. For insight on these findings, we also reached out to Bernard Smith, a former apartment manager and current owner of Apartment News Publications, which publishes magazines for managers of residential, apartment and commercial properties in southern California.
Fifty-three percent of buyers mentioned that they were using Excel spreadsheets or manual methods, such as pen and paper, to manage apartment properties. Another 33 percent were using some kind of property management software.
The high volume of buyers using manual methods doesn’t surprise Smith. The demographic information from our sample shows that the majority of our respondents manage small properties with fewer than 50 units, and Smith says these types of businesses tend to use simpler, manual methods.
Smith adds that the apartment industry is going through a transition in which older owners are passing their properties on to new owners. Indeed, 58 percent of buyers in our sample are owners—thus, it makes sense that owners who recently purchased a property would be looking to replace outdated manual methods for managing it.
More than half of buyers were seeking Web-based software (55 percent). When compared with property management data from just this past summer, we can see that Web-based systems are becoming more desirable in the property management industry overall—but that apartment property managers and owners have an even stronger preference for them.
The preference for Web-based systems amongst apartment owners and managers is likely due to the boost in convenience Web-based deployment offers, as well as the increased availability of systems today that support it. These systems offer access to information from any location, which is useful for those with multiple properties—and tenants can easily pay rent online anytime, saving managers trips to the bank.
Smith speaks regularly with owners and managers who call with questions, and he says a lot of them maintain work habits from a time before computers or the Internet. This could explain the lingering uncertainty about deployment models held by many in our sample.
Most of the requested functions included essential applications and modules available in a typical property management system: tenant and lease tracking (26 percent of the requested functions), maintenance management (21 percent), accounting (18 percent) and reporting (15 percent).
One function growing in popularity (11 percent of the requested functions) is the tenant portal: an online portal through which a tenant can pay bills, request service or otherwise communicate with apartment managers or owners.
The demand for tenant portals may be due to a variety of factors that make them valuable for property managers. For example, Smith says, portals can store background checks and other screening information to share with other managers to prevent renting an apartment to someone with a checkered history. This practice, he adds, could also save managers money.
“Right now, [managers] have to pay for credit checks and tenant screenings—but if they could get everyone to report to one another [through tenant portals], then they … wouldn’t have to [use background checks to] screen tenants anymore,” he says.
Additionally, Smith says, a portal allows tenants to make rent payments online at any time of day—meaning managers may not have to physically pick up checks each month.
When asked about the reasons behind their software purchase, 32 percent of reasons mentioned buyers looking for a property management-specific system, and 31 percent of the reasons including wanting to improve efficiency. Thirteen percent mentioned an out-of-date system and a need to modernize.
Smith says that one major benefit of property management-specific systems is that they come with regulatory-compliance functions; staying compliant is a concern he frequently hears from owners and managers who read his publications.
This push of buyers seeking industry-specific software could also partly be fueled by recent growth in multi-family construction, as well as the increase in powerful and affordable apartment-oriented software within the last few years.
Finally, as we learned before, many apartment owners pass on their properties to others, and these new owners often seek more modern and efficient ways to operate their businesses.
We also gathered buyers demographic information, and found that 46 percent represented properties with fewer than 50 units, while 29 percent represented properties with between 100 and 500 units.
Also, the vast majority (66 percent) have only two to five employees—meaning these properties are mostly small apartment complexes.
The data shows that there are still many apartment owners and managers who use manual methods for their operations, but also confirms the slow migration toward property management-specific, cloud-based software. In general, managers want modern systems that support such options as tenant portals, which make rent payments and background checks easier and more convenient.
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