Know your numbers. That’s what any good businessman or woman says. Without them, you won’t last on a show like Shark Tank. Sure, owning or managing properties might not be as fun as some of the business concepts showcased on prime-time TV, but it’s still important to have all your finances in order. Otherwise, you might be getting a call from the IRS.
Depending on your needs and budget, there are lots of options out there to help property managers keep everything running in the black. Spreadsheets continue to be a popular choice for landlords, real estate investors with a small portfolio, and small property management companies or self-managed HOA’s.
Here are some pros and cons of using spreadsheets for your property finances.
Using Excel or other spreadsheet programs for managing your properties
Who it works for best: landlords with a couple of properties, real estate investors with a small portfolio (1-5 properties), and small management companies or self-managed HOAs.
Since its release in 1985, Microsoft Excel has been a valuable asset to businesses and is still used by many companies. However, there’s been a slow decline in its use over the years. According to one survey of Canadian businesses, 68% of respondents said they rely on the software in 2018, down 10% from 2017.
Smaller businesses in the United States also reported a drop-off. In 2018, 69% were using it as their primary tool compared with 78% in 2017.
Pros of Excel and Google Sheets for Property Management:
Low cost. Companies already using Office 365 have access to Excel, Word, Outlook, PowerPoint and other applications. A license covers five computers, and the suite of software is still available for one-time purchase instead of month-to-month licensing. Google Sheets is a free alternative to Excel that is continuing to improve its functionality.
Ease of use. The basic functions of Excel and Google Sheets are fairly intuitive and easy to learn. Lots of tutorials exist to help you sort, filter, and manage your data in Excel.
Templates. There are lots of native templates for payroll registers, calculators, timesheets, and more as well as templates created by other companies to suit your specific needs.
Integrations. Excel integrates seamlessly with other Microsoft business tools for word processing, databases, visual representations of data, and email. APIs for Excel and Google Sheets are available in most major business data management apps as well, so you don’t have to worry about converting or exporting the files when using it with other software.
Cons of working with spreadsheets:
Data processing limitations. While the basic accounting functions in Excel allows a property manager to track rental income, expenses, budgets, and manage the billing and reconciliation of CAM expenses, property managers need to process more data than that.
Steep learning curve. The basic calculations are easy to get down, but not everyone is proficient in its use. Excel features like macros and formulas can be difficult to get a quick grasp on.
Error-Prone. While spreadsheets come with pretty robust functions, they require a lot of manual data entry and manipulation. The obvious downside to this is that human error is increased, especially if you aren’t applying the correct formula. Research has shown that up to 90% of all spreadsheets have errors that affect their results. Small errors can result in huge costs.
Scalability. Larger companies are likely to use more robust budgeting and planning tools, so if major growth is part of your business plan, you may want to find a better tool that can grow with you.
While Excel and Google Sheets provide a great way to store data, it’s not up to the task of complex calculations, management, data visualization, and data communication. But if your company or portfolio is small and limited by budget, it may be the best or only solution for you.
Spreadsheet solutions designed for property management
If you like using spreadsheets, there are SAAS-based apps available designed specifically for property management to use in tandem with Excel and Google Sheets. Here are some free property management templates you can download to help from Smartsheet. These templates can be used in Excel or in Smartsheet’s platform, which helps all types of businesses plan, track, automate, and report on their work.
Appsheetallows you turn a google sheet into a property management app, giving you a way to customize an easy-to-use and attractive dashboard view with all the data you need to manage everything from applications to generating and emailing billing statements. These apps start as low as $5 dollars a month per user and are scalable to accommodate any landlord, real estate investor, or property manager as your portfolio grows.
Accounting and financial planning for property management comes with its own unique challenges. It’s far more complicated than other common accounting tasks like payroll due to the nature of the business. Tracking application fees, late payments, late fees, filing tax returns, budgeting for repairs, and collecting rent or HOA dues on time are just one small part of a property manager’s job description. With this in mind, estoppels.com has created a platform to help ease the stress of managing estoppel requests from title agents and home sellers. We take care of the whole estoppel process from request to gathering payment to sending important documents like buyer approval to sign, so you have less thing to worry about. With less paperwork, you’ll have more time to spend on growing your business.