Careless management of multiple properties can lead to double bookings, difficulties in property maintenance, and issues with tenant searches.
The more properties you have, the harder it becomes to manage them. That’s where a property management system can help you out.
The global property management market has grown significantly in recent years and is expected to be worth $12.89 billion by 2025. The adoption of property management systems are fueled by changes in consumer behavior and preferences, and the need for more efficient consumer assistance and issue handling.
So, if you want to have the upper hand in managing your real estate, below you will find a guide on how to create a property management system. This article will give you insight into the core features of custom property management systems, and ways of building it.
1. What is a Property Management System?
A property management system is software designed for property managers, owners, and operators to automate and simplify key business processes in managing properties.
The business processes may involve finances, communication between tenants and landlords, and data storage. Property management system softwares are usually based in the cloud- or on a local server.
Property management systems are used in various industries and fields such as:
- Manufacturing and logistics
- Local governments
- Commercial real estate
Property Management Market
The market and the demand for a property management system are closely related to the real estate market in general.
However, a property management market does not follow the same tendencies as the real estate market. It still has its own patterns. For instance, the property management market is usually more resilient to any economical declines.
The revenue of the property management market is expected to reach $12.89 billion by 2025 with average industry growth predicted to be 2.5%. According to IbisWorld, there are currently over 290,000 businesses in the property management sector in the USA.
Since the 2008 economic crisis, investors have started strengthening their capital by allocating it into the real estate market. The reason for this is that the real estate industry has low-interest rates that generate increased liquidity and returns.
After 2008, the government created new rules, including one called the “JOBS Act” that allows small businesses to participate in real estate crowdfunding.
Related: How to Start a Real Estate Crowdfunding Platform like Fundrise
After the JOBS Act was approved, there was a large increase in real estate investments, since non-accredited investors could participate in the real estate crowdfunding process, and many stakeholders began using multiple channels for communication and data storage.
However, not all the new real estate market players were familiar with online tools for managing their properties. Many still used a paper-based approach, storing all of their reports and information offline. This seemed like a great opportunity for entrepreneurs to introduce new services and software, like rental property management systems.
2. Why Build a Property Management System
We’ve seen that the property management market is still young but very promising. Let’s look closer at the benefits of building a property management system.
Multiple Property Management
The issue of managing multiple properties simultaneously is probably the first and most important reason why property owners are even thinking about how to create a property management system.
Such real estate management software eases the process of accounting, reporting, and communicating. All the information can be found in an owner’s portal.
Efficient Data Storage
No more paper reports or documents. With a property management system software, you can access the necessary information in just a few clicks. This system lets you feel confident about the way you store data. To have the most convenient access to your data, we would recommend that you build a web-based property management system rather than a local-based property management system, as the latter one would provide you only with computer access to data.
Automation is a friend to any business. By automating repetitive tasks, like same-type responses to tenants, manual property vacancy postings, or billing, you and your team will be able to focus on more productive assignments, like finding tenants or processing leads. Plus, the risk of making a mistake is greatly reduced, since the system will be taking care of everything for you.
The property management system is a product with potentially broad functionality. As your business grows, you are more likely to expand the system with such property management system features as tenant screening or revenue management. However, it should be noted that the ability to scale an online real estate management system is available only with custom software solutions.
People who rent properties from you, trust your company with their personal information. In case of a data leakage, you’ll be the one legally responsible.
The best way to secure all your data is to build a property management software from scratch. Custom property management software development will allow your store all data in one place, and to secure it with using encryption and other security measures.
3. Types of Property Management Systems
A property management system software is absolutely essential to any type of property, as it will help you manage different real estate assets, automate repetitive business tasks, and store all your data in one place.
Let’s review the top 5 types of property management systems.
Residential Property Management Systems
This type of management system is designed for owners of apartment buildings, houses, single-family, and multiple-unit properties who are renting either for the short- or long-term. The residential property management software allows owners to:
- sign online leases
- track multiple occupancy leases
- collect online rent payments
- organize property inspections
- file for maintenance tasks
- manage property accounting
Commercial Property Management Systems
Owners of office buildings and retail sites use commercial real estate management software to:
- reduce wait times on property maintenance
- gather lease data from various contractors
- schedule rent increases
- collect online rent payments
- customize online reporting
Hotel Management Systems
Hotel and hostel management systems help to manage such front-office tasks such as:
- booking rooms
- checking guests in or out
- assigning rooms
- tracking room availability
- managing bills
Home Owners Associations (HOA) and Condo Management System
HOA management systems are designed for condominiums, townhouses, co-ops, and property HOA. These systems include such property management system features as:
- initial resident screening for sublets
Industrial Property Management Systems
This kind of property management system is used for offices, warehouses, logistics facilities, and industrial properties.
The essential function of Industrial Property Management Systems:
- facility maintenance management
- lease administration
- space management
4. Core Features of a Property Management System
A property management system functionality will have different functionality depending on its purpose. For example, industrial property management softwares have features of monitoring important assets and inventory, while hotel management systems have online receptionists and housekeeping management features.
We are going to take a closer look at the most typical and essential property management system features. If you need to find out which functionality best fits your type of real estate management system, you are welcome to contact our experts.
Portals for Various Users
Portals are built for better users’ navigation in the online real estate management software.
There are three user roles that can use a residential property management system: tenants, applicants, and owners (landlords, property owners, or any staff member). Each of these user types have different functionality.
Tenant portal. Tenants usually have a dashboard where they can view tenancy details and outstanding charges or their lease status, pay rent and fees online, submit maintenance requests, get rental receipts, and communicate with landlords.
Applicant portal. Applicants can apply for renting a property and sign lease or renewal contracts at any time.
Owner portal. Property owners have online access to information on the property. Also, they should be able to view documents, like financial statements or unit inspection and property reports.
With an online property management system, you will be able to do a tenant screening, manage a move-in or move-out, customize an online lease agreement, create as many templates for lease agreement as you need, or send online lease renewals.
By integrating a property management software to your real estate booking website, you will be able to offer renters online applications that they can fill out, pay an application fee, and automatically get access to the database as an applicant. From there, you can convert any applicants into renters.
Integrating online payment systems will help you reduce the time spent on billing, decrease costs spent on paper reports and invoices by going fully digital, and securely collect rent.
Collecting rent online is the must for online payments. By introducing payments via a credit card or an electronic funds transfer (eCheck), you will be able to offer your renters a simple and quick solution. Renters will have the ability not only to pay rent online but also to view their account balances, scan cheques, and receive receipts.
For keeping track of renters’ payments you can create automatic notifications and email reminders.
The accounting will help you monitor your business expenses. Generating rental tracking and financial reports, creating one-time or recurring bills, tracking the current budget, doing bank reconciliations, and managing the general ledger, are some features that should be included in the accounting functionality.
Reports help you sum up information about how your business is doing and where it is headed. It covers such aspects as expenses and income, fees, payments, and property availability. With a custom property management system, you will be able to customize your reports by adding any necessary columns, selecting different fields, and sorting by various titles. Also, make sure to include such functions as downloading reports in different formats.
Maintenance Request Tracking
Property maintenance issues may often occur, like leakages or malfunctions. That’s where an online real estate software can help you resolve problems quickly and conveniently. Allow renters to submit maintenance requests and track their status. By creating a form application, renters will be able to describe the problem, upload photos, and indicate the emergency of the task.
In its turn, property owners will assign tasks to maintenance workers, supervise the work process, and track schedules.
Your real estate property management system will store all the information on your properties, renters, and finances. A custom solution will allow you to upload, download, and manage different documents, such as rent rolls, balance sheets or cash flow statements. This way, your business will be able to go paper-free, which will reduce some of your daily expenses.
By having a built-in messaging feature, you will be able to contact renters via text message taken from your property management system’s contact record. Send emails individually or in bulk, create a group, and store the chat history right in the system.
If you have multiple properties for rent, then you probably post them on various property listing websites. This can take a lot of time, especially if you are doing it yourself. By building a custom property management system, you will be able to post your vacancy units to multiple channels. An owner portal will allow you to view links of posted property vacancies and their status, add or remove a vacancy if necessary.
Another feature that can be implemented for avoiding double bookings is the multi-calendar. This feature will be especially useful for property owners who provide short-term rentals. Build a multi-calendar that will gather information from all channels and help you easily navigate bookings. Customize your calendar by adding such abilities as booking details, prices, and information on renters.
5. How to Create a Property Management System: 2 Ways
Custom Development is a way of building a property management system from scratch. Usually, custom property management systems are necessary for those who encounter such issues as property management or having to deal with multiple properties on a daily basis.
Why Choose Custom Development for Building a Property Management System?
- Everything will be tailored exactly to the needs of your business
- Any desirable feature can be implemented
- High-quality rental property management software you can rely on
- Easy integration with APIs and various tools (Stripe, PayPal)
- Ability to add more features at any time and expand the system
- Custom UX designed specifically for your target audience
SaaS (Software as a Service) is a service subscription that provides a pre-build software for rental property management. All you do is pay a monthly subscription fee to access it. Such ready-made solutions are suitable for those who are just starting their real estate business and do not yet require an individual approach or manage a large number of properties.
Why Choose SaaS for Building a Property Management System?
- Relatively low prices (Appfolio – $1.25 per unit/month, minimum monthly fee – $250)
- Takes little time to start using a SaaS solution
Pitfalls of SaaS Online Property Management Software
- Limited set of functionality (e.g. hotel management system – front desk, booking, reporting, customer database, calendar, channel management )
- No customization abilities
- Dependency on tech support
- Tech issues due to outdated technologies
- Lack of support for languages and currencies
On a final note, the real estate industry and property management have grown a lot in recent years. Investors view this as an opportunity, which is why they finance more property developers. In turn, this increases the demand for property management systems.
For knowing how to create a property management system, you first need to decide on 3 things:
- The type of property management system you need (depends on what types of properties you own)
- Core features
- Way of building a property management system
Sloboda Studio has been building real estate websites for 5 years now. We have already built marketplaces, management systems and CRMs for the real estate industry. If you decide to build a custom property management system, feel free to contact us for a consultation.