In an age driven by technology, it’s only natural that rental property owners want financial management of their real estate investments to follow suit. To this end, many PMs are swapping manual accounting efforts for rental property accounting software.
Rental property accounting software is used to manage and record all of the financial transactions connected to properties in your portfolio. This includes rent payments, late rent payment fees, parking fees, maintenance and repair expenses — and the list goes on. Balancing the books through this approach offers big benefits to your business and rental property.
1. You’ll Save Significant Time
In AppFolio’s 2022 Property Management Industry Pulse, 62% of 1,000 PM employees surveyed identified operational efficiency as their top challenge. Investing in rental accounting software helps move the needle in the right direction for managing your rental properties.
Let’s use rent collection payments as an example. When tenants write rent checks, the property manager has to deposit these checks and then manually account for them on a spreadsheet or another tracking tool. Rental accounting software allows for monthly rent payments to be made online, with payments automatically tracked in the system. Many modern rental accounting softwares also allow for rent reminder emails to be sent out, saving you further time while creating more helpful correspondence with the tenants and streamlining tenant communication.
2. You’ll Reduce Manual Errors
Accounting errors can happen for a number of reasons: the numbers are transposed on a vendor invoice and the vendor is overcharged, a parking fee entry is duplicated and a tenant is charged twice, etc. Universally, these errors — no matter the cause — create frustrations for the vendors and tenants on the receiving end of these issues, and in turn, owners in your portfolio.
Designed with automation in mind, rental property accounting software eliminates a lot of manual input that could lead to costly mistakes. Circling back to the vendor invoice example shared above, a rental property accounting software can automatically create and send invoices to third-party vendors, so the numbers are correct on their books and yours. These positive interactions lend themselves to more long-lasting partnerships.
3. You’ll Gain Actionable Insights
When financial data for properties are housed in spreadsheets or other paper-based formats, piecing it all together to form a helpful narrative for the business becomes a difficult task. What’s great about rental property accounting software is all the data is readily available in one place and the data you want to see is readily accessible via customizable reports.
While many of these reports support PM business efforts — from cash flow statements to balance sheet reports — others can be specifically helpful to rental property owners. For instance, PMs can use these capabilities to create quarterly financial reports for an individual owner so they can better track their earnings and make smarter investment decisions for the future.
4. You’ll Have More Room to Scale
Buildium recently released their 2023 Property Management Industry Report. In the report, they note property management professionals anticipate portfolio growth that hasn’t been seen since 2017. And the growth is significant: the majority of PMs expect their portfolios to grow between 26% and 50%.
To support this level of growth, property management companies need to be armed with technology that helps them work smarter not harder, as the old saying goes. To put this in perspective, businesses that switched to cloud accounting experienced a 15% boost in revenue year-over-year. The right accounting software designed for property managers can really streamline your property management services.
Pair Rental Property Accounting Software with Other Value Adds
Rental property accounting software offers a variety of benefits to property managers — benefits that ultimately trickle down to the rental property owners in their portfolio. This win-win type of scenario can be found in other value-added PM solutions like Steady’s rent protection.
With our Rent Advance solution, for instance, PMs can provide owners up to 12 months of rent — cash-in-hand — on the day a lease is signed, solving threats of nonpayment and giving owners a means to scale their real estate investments. Property managers, meanwhile, receive all of their management fees upfront and can use Rent Advance as a competitive advantage in attracting and retaining business.
Interested in offering our rent protection services to owners in your portfolio? Consider becoming a Steady partner PM — and when you’re ready to take that next step, contact us.