It is safe to say that every self-managing landlord has a system to help them keep on top of their property business. Popular tools range from paper-based systems, through to software, access databases, spreadsheets, or a mix of these. In this post, we’re going to look at the most common management methods used by landlords which are spreadsheets and property management software.
Using Spreadsheets for Property Management
Many landlords start with spreadsheets, after all, most spreadsheet programmes are free to use. Let’s take a quick look at the pros and cons of using spreadsheets for property management.
Pros of using spreadsheets to manage your property business
If you’re well versed in spreadsheets, or at least have a basic understanding of them, it’s easy to put together a quick spreadsheet to track finances and record tenant details or to download templates from the internet.
Spreadsheets are a flexible and useful tool for property management. A spreadsheet can perform complex calculations quickly and easily which can help you keep on top of finances. Once you have a simple template set up, all you need to do is fill in the data and the spreadsheet will do the rest.
You can print a spreadsheet to a PDF file and email the document to your accountant, or in the case of a cloud-based spreadsheet, share it with someone.
A spreadsheet is perfect for landlords with very few properties. It’s not difficult to track income and expenditure on a spreadsheet when you have one or two properties. Watch a few YouTube videos if you need to learn how to master the basics of Excel or Google Sheets. Unless you have a burning desire to get to grips with Pivot Tables, it won’t take you too long to feel comfortable using a spreadsheet.
Cons of using spreadsheets for property management
As your portfolio grows, spreadsheets may lose their allure. The more complex your property management needs become, the harder it will be to keep track of your income and expenditure on a simple spreadsheet. It’s also worth noting that unless you install a software plug-in, spreadsheet programs like Excel are incompatible with Making Tax Digital.
Data input into a spreadsheet is also rather repetitive. Each transaction must be manually recorded, which increases the likelihood of errors creeping into your accounts.
Collaborating on spreadsheets is also a potential security risk. If you give other people access to your spreadsheets, there is a risk they accidentally delete critical data or edit it so it’s incorrect.
Using Software for Self-management of your Property Portfolio
Property management software becomes invaluable when you have a larger portfolio. It’s hard work managing multiple properties. There’s a lot of time, effort, admin, and deadlines involved, and if you’re not incredibly organised, you could miss something critical, like a boiler service or gas safety check. Let’s take a look at the pros and cons of using software for self-management.
Pros of using software for property management
Spreadsheets are useful for recording information, but they don’t send out alerts when a tenant is late with their rent or a property is due for an inspection. If you own one or two properties, you can probably work around this, using a smartphone app or calendar as a diary and cross-referencing dates with your spreadsheet. However, this is not a time-efficient way to run a growing business.
Property management software saves time and reduces admin. Instead of juggling different interfaces, such as Excel for your accounts, and a messaging app for contacting tenants, you have all the tools you need inside one interface.
Software allows you to keep your accounts in order, submit information to HMRC, and chat with tenants at the same time. For a busy landlord, this is a huge advantage. And if the software you use is cloud-based, you can run your portfolio from anywhere.
Data inputting is a lot easier with property management software. Repeat transactions don’t need to be manually added each week/month. Data fields will be automatically populated once key information has been added to the system. You can export data, create reports, and see at a glance how profitable your portfolio is and look for opportunities to save money.
Cons of using software for property management
As with any software application, as well as spreadsheet systems, there is a learning curve. It’s unlikely you’ll get to grips with a new software package immediately. It will take time to figure out how it works and what the shortcuts are.
There is also a cost. In some cases, subscribing to a property management software package can be more expensive than using a spreadsheet application. There will either be an upfront cost or a monthly subscription charge. If you only have one or two properties, you may not be able to justify the extra expense, although it is tax-deductible, of course!
Not all property management software providers are created equal.
The best property management software is an all-in-one solution that allows you to manage all elements of your property in one place. However, you’ll find some providers offer modular software, meaning you have to pay for each of the different elements of the software. Others provide a good platform for property management but require you to purchase an additional subscription to a financial package as well so be aware of what you’re paying for when purchasing software.
We recommend landlord software that is reasonably priced and doesn’t require you to purchase add-ons to manage different elements of your property.
Spreadsheets vs Software for Self-management of your Property Business
Smaller landlords or ‘accidental’ landlords should be fine using spreadsheets to manage their properties if they have one or two properties as there will be fewer transactions to record and less admin to worry about. Create your own spreadsheet or download a template to get started. Spreadsheets for smaller landlords are relatively easy to maintain and your accountant can export the data for year-end tax returns. So, if you are new to the buy to let sector, start off with a spreadsheet to manage your rental income and expenditure. It should do you just fine for a while.
Professional landlords will benefit from investing in property management software. The added features will save you time on property management and it’s a lot easier to run a property rental business when you use bespoke landlord software that can store all the necessary information.
If you don’t want to pay a letting agent 10-15% of your rental income anymore, it makes sense to invest in property management software. The more properties you own, the more landlord software will help you.
However, don’t rush in and buy the first software package you come across. Take advantage of free trials and read user reviews. Make sure the package you want offers all the features you need, such as MTD integration. Check whether the provider offers tech support and is available to answer questions you may have because it’s pointless upgrading to landlord software if you can’t make it work properly or get the support you need to get started.
Read More Like This.