Features of a Property Management Software

Property management is the term given to the supervision and management of residential and commercial property. A professional property manager works both as a comptroller and as a field manager. Field management is a broad term and involves supervision and purchase. Property management software was designed to help both managers as well as landlords handle various aspects of property management. These software tools aid the process of management but cannot be used as a substitute for property managers.

Types of Property Management Software

There are a number of property management kits available in the market. One must remember that the software purchased should suit our specific purpose. For instance if one owns a commercial property, say a warehouse, a good property management software should provide advanced inventory management tools. In case of a motel business the property management software should help speed up the process of check in and reduce the check out time. While in case of a residential property the software should provide an easy means of keeping track of tenant records.

Features of a Property Management Software

Every property management software performs certain common functions in addition to providing specialized services. Rental property management software is one of the most commonly used accounting software applications. It has the following features: financial management and record maintenance.

Financial Management

Net Rental Income
Let us take the example of a rental property. The tenants pay rent on a monthly basis. In exchange the management is expected to provide certain services. The following expenses are incurred on any rental property : service charges, amount allocated to sinking fund, fire insurance costs, repairs and a few other costs. The cost of these services is deducted from the gross rental income paid by the tenant to arrive at the net rental income figure.

Total Cash Flow (TCF)
One would assume that the net rental income is the same as cash flow. However this is not so. Net income has a number of other non-cash charges that have to be added back to obtain the total cash flow. Non-cash revenues must be deducted from the net income in order to arrive at total cash flow. We also need to add any decrease in working capital to the net rental income and subtract any increase in working capital from the net rental income to arrive at the total cash flow.

Components of TCF
Total cash flow has three components: cash flow from operating (CFO) activities, cash flow from investing (CFI) activities and cash flow from financing (CFF) activities. Expenses like repairs of a routine nature can be classified under operating activities. Building a new fire escape is an investment, while the funding of this investment is a financing activity. It is possible that the net rental income is positive while the operating cash flow is negative. This is not desirable since it would imply that the business is unable to meet its operating expenses on a timely basis.

Rental Yields
The rental yield is a measure of the profitability of the investment. It is calculated using the following formula:

Rental Yield=(Net Rent*12/Purchase price)*100

The higher the rental yield the better the return on investment. In other words a high rental yield denotes a successful investment.

Financial Statements
A property management software can simplify our lives by maintaining all the necessary financial statements viz: the income statement, the statement of cash flows and the balance sheet. Net income is obtained from the income statement, the statement of cash flows provides the TCF while, the balance sheet presents the assets and liabilities.

Taxation
The property management software also provides tips for saving taxes by using the rental deductions to our advantage. Maintaining financial statements is necessary for the purpose of filing tax returns at the end of the year.

Maintaining Records and Generating Reports

Maintaining tenant records is relatively simple but depending on the volume of activity it can become cumbersome. Tenant records are a must since they indicate the terms of the lease. Renewing the lease agreement, sending an eviction notice, keeping track of the dues and sending a notice in case of late payments are some of the benefits provided by the property management software.

The right property management software is a great boon to any property manger. It is also useful to the owner who in due course of time can become proficient in various aspects of property management through the rigorous use of the software.