There has been a rise in the number of web based property management software products lately, all trying to make you believe that you should put your management business in the ‘cloud’. These vendors are selling their product using SaaS, which is commonly known as ‘Software as a Service’. That means you don’t own the software – you basically ‘rent’ the software for a monthly fee. While that may work for some rental property managers, there are several ‘myths’ that are used as selling points that you should be aware of. Then you can may an educated choice as to whether the web-based or the traditional desktop version is right for your business.
Myth #1: Only web-based systems handle online tenant services
Of course, enabling a tenant to pay online is an advantage. They can pay rent 24/7 from virtually any location. Payments can be set up as recurring, eliminating the need for the manager to collect the rent in person or through the mail. The fact is that an online payment service is not unique to a web-based product. Some desktop software products allow the property manager to have a branded site that their tenants can access securely and pay their rent with a credit card, eCheck, or by setting up recurring rent payments. All transactions are not only downloaded into the software, but recorded in the bank register and the management fees can be automatically posted on each payment.
Myth #2: Improved record-keeping
Whether your accounting is online or on your desktop, the record keeping is a function of the software, not the media. As a matter of fact, what web-based vendors don’t tell you is that since the data is traveling thousands of miles back and forth on a server, online software is inherently slower than desktop based software. Gone are the instantaneous changes when you make an entry or run a report. There is a lag time (read ‘wait time’) while the data is being processed. That makes the software seem ‘sluggish’ and is not conducive to a busy business office.
Myth #3: Better security
Just read the news or watch TV …. there is an absolute epidemic of security breaches from retailers (Target, Dillard’s, and many others), online stores (Amazon, eBay, Google, and more), and private cloud computing companies. Not to mention data ‘acquisition’ by our own government agencies, such as the NSA. Web-based software may tout automatic backups, but just exactly ‘where’ in the ‘cloud’ is your data? It may be better than never making backups… but certainly having all of your critical data on some unknown computer somewhere on the web is not better than having it in your own hands. How is your data backed up? Who has access to it? What if your passwords are stolen? These are questions that you should be asking. With desktop software there is no ambiguity. You can still be reminded to backup, and your data is on your own computer and backed up on CDs, DVDs, memory sticks, or external hard drives, and you have all the control. When the web-based server goes down (and they all do), what happens to your data? How long will it take to restore the information while your business is at a standstill? These are factors that you should carefully consider since they could drastically affect your entire business.
Myth #4: You business will run more smoothly
Well, other than the sluggishness nature of the entries themselves, what will happen if there is an Internet issue? Anyone that has worked on the Internet knows it is not 100% reliable. Maybe it is not the fault of the web-based server (but it could be), but ‘any’ interruption of the Internet connection will put your business at a standstill. No rent collection, no paying vendors and owners, no business at all. Is that worth the risk? You will hear lots about ‘redundancy’ of your information, but that is of no help when your connection is lost. Think about it.
Myth #5: More features such as website creation
As a property manager, you have probably been ‘swamped’ with offers to have a website created for you. There are some incredible sites for realtors and property managers. The web-based software companies will certainly sell you an integrated site, but most likely, since that is not their main business, it will cost more or not be as good as the ones that are developed by companies that only design websites for real estate. And what does the ‘integration’ part mean? Mainly it means that your data, such as interior/exterior features about your rentals, and photos can be uploaded from the software to the website. Desktop applications can do that, too.
Myth #6: Better communication with Owners
Some web-based products advertise that your owners can see their accounting at any time. That may sound interesting, but most property managers don’t want that. Most managers don’t want their owners to constantly monitor their online accounts because they may not always be up-to-date and have not been properly reviewed for mistakes or omissions. That could result in unwanted calls from the owners asking why the rent wasn’t posted yet and other questions that would be avoided once the accounting was finalized. With some desktop software, the property manager can email all of the statements to the owners once the accounting is reviewed and completed. As with the online tenant payments, you can also get set up to pay your owners directly to their bank accounts. In fact, you can also pay any Vendor through direct deposit as well.
Myth #7: Better pricing
It is true that there is less cost up front – that is because you are making monthly ‘lease’ payments. Just like renting a ‘rental car’, you will pay less up front, but over the long run you’ll pay much more, and you still won’t own the product. Worse yet, and unlike a car payment, the cost could be increased or the company could disappear, leaving you in big trouble. The average small property manager who is paying $20.00 monthly to the SaaS company is really paying $240.00 per year to start, usually not including a website or other services. So in 3 years, they will have paid a whopping $960.00 and still they don’t own the software. If you are a bigger property management company your costs are possibly doubled or tripled. With desktop software, you make a one-time purchase at a much lower cost, which you can fully write-off as a business expense.
Myth #8: No need for training
That depends completely on the software. A well designed software will just ‘make sense’ to the user right away and not require much training, if any. If you have to attend a class just to operate a rental management software program, it is probably too difficult to begin with. But everybody ‘does’ need some help to begin with. Does your software offer any free personalized phone support? What about later on if you run into questions? Make sure you ask about this if you are considering web-based software.
Myth #9: It’s the newest trend
We aren’t talking about hairstyles here – this is your company, your livelihood. You have to decide what is best for your business. The Internet is wonderful and has revolutionized the world. Maybe at some point the speed, data security, costs and other issues will improve, but right now property managers want security, stability and confidence that the software running their company will be stable, the company will not go out of business, and that the product is easy to learn and use.
Myth #10: Easier to use
Make sure the company you chose will back up what they say. Download a fully working copy and try it out. Make sure that the software is easy to learn, user friendly, and provides good support.