As a landlord, property investor, or homeowner, you know that staying on top of rental property finances is key to maintaining a healthy real estate portfolio. The two main tools often used are spreadsheets and rental property management software. But which one is right for managing your real estate investments?
In this blog, we’ll go over the pros and cons, features, and functionality of spreadsheets vs property management software.
What Are Microsoft Excel / Google Spreadsheets and Property Management Software?
Excel and Google spreadsheets are widely-used tools for data organization, allowing for detailed data entry and analysis. On the other hand, property management software is a specialized tool designed to automate and streamline property management tasks, such as monthly rent collection, expense tracking, bookkeeping, financial reports, and more.
What Information Can Be Stored in Property Management Software Over Spreadsheets?
There’s certain information that needs to be logged, regardless of what data management method you choose:
- Financial data for each rental property
- Property listing details (unit description, pictures, features, etc.)
- Tenant and lease information
- Employee and contractor information
- Maintenance requests and task logs
Rental property software can store extensive rental business information that goes beyond what spreadsheets can handle. Besides basic property and tenant data, cloud-based property management software solutions like Baselane include advanced features such as auto-importing new transactions from financial accounts, online rent payments, rental property accounting and auto-tagging, tenant screening, and virtual banking integration for property and security deposit accounts.
Use Cases for Spreadsheets vs Property Management Software
When Should You Use Spreadsheets?
Property management spreadsheets can be a good fit for portfolios with a handful of properties or new landlords, rental managers, and real estate investors. They are recommended when your requirements are straightforward, such as basic bookkeeping and tracking tenant information and you don’t mind manual data entry.
When Should You Use Property Management Software?
Property management software should be the go-to choice for larger portfolios, especially when:
- You manage multiple rental properties (more than 1-2 units).
- You want to auto-import transactions to reduce manual work
- You want to auto-tag transactions to reduce manual work
- You want to accept online rent payments and simplify bookkeeping.
- You need mobile access to manage properties on the go.
- You require advanced reporting and financial statements for partners, investors, and lenders.
- You work with a team and need real-time updates to make business decisions.
Spreadsheets vs Property Management Software
Pros & Cons of Spreadsheets
- Simple Layout: Google Sheets and Excel templates for rental properties have familiar layouts for manual data entry.
- Customizable Features: Spreadsheets offer customization options for complete control over data visualization.
- Financial Reporting: Spreadsheets can produce detailed reports of rental earnings and accounts for tax purposes.
- Human Errors: Recent studies indicate that 88% of spreadsheets have input errors from manual data entry.
- Manual Processes: Requires a lot of time and manual data entry of rental property income and expenses.
- Complex Calculations: Managing advanced formulas and charts can be challenging.
- No Real-time Financial Reporting: Unable to generate advanced reports at a property and portfolio level for net operating income, cash flow statements, and other financial records to analyze and manage property performance.
- No Real-Time Reporting: Unable to generate Schedule E reports that can be used to prepare and file tax returns.
Pros & Cons of Property Management Software
- Accurate Records: Property management software automatically tracks rental property income, rent payments, and expenses without any manual data entry to ensure complete and accurate financial records.
- Advanced Bookkeeping and Reporting: Property management software generates advanced reports at a property and portfolio level for net operating income, cash flow statements, and other financial records to analyze and manage property performance.
- Tax Reporting: Software like Baselane can help generate Schedule E reports that can be used to prepare and file tax returns.
- Save Receipts: Property management software will link digital copies of receipts to specific properties or repair jobs. This provides a complete overview of the repair process, including invoices and details for each unit and property.
- Virtual Banking Integration: Connect Baselane property management software with external bank accounts or open a Baselane banking accounts for unlimited properties, partitioned for each unit, including dedicated accounts for security deposits.
- Auto-tagging: With Baselane’s virtual accounts and virtual cards, which are only available with a Baselane free banking account, you can set rule based mapping to the property and income and expense Schedule E category. This saves you countless hours each month.
- Learning Curve: Specialized property management software deviates from the traditional functions of spreadsheet programs, making the transition process appear complex, but most rental property software is designed to be user-friendly.
- Costs: Most property management software comes with subscription fees. While the benefits and features often outweigh these costs, it’s something to consider if you’re on a tight budget.
- Limited Customization: Unlike spreadsheets that have extensive customization options, property management software might not be as flexible. Some platforms only have standard reporting capabilities and financial tracking features that can’t be changed.
How to Use Property Management Software?
When Should You Use Spreadsheets?
Getting started with property management software is simple. Register for an account, input rental property and tenant details, and then link a bank account to automate expense tracking and manage security deposits. Or signup for Baselane’s free Banking account that offers virtual accounts and cards, tools that help you automate your bookkeeping process.
Baselane rental property management software offers advanced features for automatic rent payments, late payment reminders, Schedule E transaction tagging, and other features to save time on property-related tasks.
When Should You Use Spreadsheets?
While spreadsheets may be a good starting point, property management software offers advanced features and automation to maximize the financial performance of your real estate investments.
Baselane rental property finance software can help simplify property management with online rent collection, landlord accounting, automated accounting and bookkeeping, security deposit accounts, and save you countless hours.
Sign up for free and start streamlining cash flow for your real estate investments.