By Kim Fernandez

Some days, it seems like the earth itself must revolve at the whim of a Web designer and his computer. E-mail has become the communication method of choice, professionals are told to look to the Internet for information that might have been mailed to them just a year or two ago, and apartment residents are largely shopping for their next homes via the World Wide Web. “Virtual tour” has become an accepted industry term; two years ago, it was nearly unheard of for all but the most upscale properties in the largest cities. High-speed Internet access has become the standard in new apartments rather than an added perk.

And yet, estimates say that 25 to 40 percent of apartment communities have yet to automate their property management systems. Some of these, mainly smaller communities, are still using index cards and manila file folders to keep track of rent, repairs and other management issues. Others are using computers but relying on DOS-based systems; Windows remains a foreigner. And even communities that have automated their systems report having one or two computers in the rental office. The concept of a computer for each employee, so long accepted in other industries, hasn’t quite hit home yet in the rental housing business.

Why is that? According to property management software suppliers, there are a host of reasons. These range from a perception that software is as difficult to use as it was five or 10 years ago, to a feeling that on smaller properties, pen and paper do a fine job of keeping records, than you very much. And then there’s the expense of buying and installing computers that then must be networked and maintained, which can strike terror in the heart of a property owner or manager who hasn’t tackled such a project before.

But those who program software say that these fears are largely unfounded. Property management packages have come light years in a short time, and are easy to learn, use and customize for any size property or portfolio. The trick, they say, is to ask the right questions and find out exactly what you’re buying before you commit to any software package.

Automating the Industry

“In the past five years, the industry as a whole has made an impressive march towards automation,” says Jacob Garza of Property Automation Software. “Just look at the properties screening applicants. Many onsite managers can determine the eligibility of these applicants within minutes, something that used to take days.”

Others agree, but say there’s still a lot of work to be done when it comes to computerizing property management. “Through the use of property management software, typical management routines, such as rent collection, resident notifications and bank deposits, which used to monopolize a manager’s time, are now nearly effortless tasks,” says Sam Ausmus III, President of IPM-Software. “There are some management companies that have not elected to automate the property management at the site level. Reasons for not automation vary—budget considerations, staffing considerations and internal control considerations are just a few.”

Tim Schaefer, President of American Computer Software, agrees. “While the software developers have consistently made their property management software easier to use, there are still managers who are not using automation to any large degree. This is both frustrating and challenging,” he says.

And others say that there are two widely divided camps in the industry: those who have already automated and those who are either not using computers at all, or are using old, antiquated programs. “When it comes to technology, the real estate industry has tended to evolve slowly,” says Fred Goodman, Vice President of Management Reports International. “Many are just now migrating from DOS-based software products to Windows-based software products. Some properties may not be automated, even if their company’s home office is. At the same time, other companies are embracing the latest technologies and expanding their systems, so there’s a lot of excitement.”

Many people feel the same way. Dennis Johns of Yardi Systems says that his company has customers collecting rent via rent payment stations, which allow renters to use debit cards rather than writing a monthly check. Others are using software to provide prospective renters with virtual tours and brochures on a property, and some even accept a rent deposit over the Internet via a secure credit card transaction. “The first and only visit to the property management office is to sign the lease,” he explains.

And while the assumption may be that smaller property owners aren’t as likely to automate as their large corporation competition—that’s simply not true. “Size is not really a determining factor to whether a property management company is going to adopt a new technology or not,” says Brian Good of ResidentDirect. “We have some small companies that are more automated than large REITs. It really depends who runs the company and how forward-thinking they are. I’ve seen REITs on DOS-based systems, backing up their data every night on a disk. On the other hand, I see mom and pop-based companies who are using Web-based systems.”

Getting Automated

Before purchasing any property management software package, experts say, an owner or manager should first do the research to ensure that the package will meet his or her community’s specific needs. Smaller communities certainly have different requirements than huge ones, and individual property owners will likely make different demands of their software than will big companies with central offices. The best way to ensure that a program will meet a community’s needs is to demonstrate it and ask questions of a company sales representative.

That said, however, there are several functions that should be incorporated into any software program:

Yardi’s Johns recommends a package that integrates both property management and accounting functions. “Without this feature,” he says, “the property manager must address a forever reoccurring list of issues with data compatibility, duplicate data and interfacing with new technology.”

Michael Mullin, general manager of AMSI, a Geac company, recommends finding a vendor with an established reputation in the property’s specific market. “Being able to find employees who have experience with an application will prove meaningful in the future as turnover occurs on site,” he says.

Thornton Michaux of Property Boss says there are a few things to look for, including a system that is simple to implement and use, offers customer support and has seamless integration with other applications.

Michaux also tells owners to determine the total cost of ownership of a package, including hardware, software, support, broadband and consultants. “This number can run as high as $4,000 per user per year,” he cautions.

Ensuring that a package meets the needs of a property’s business objectives is also key, says Julie Emmert of RealPage Inc. “A prioritized list of functionality requirements should be created,” she says.

Goodman says to “make sure your solution can grow with your organization.”

Good says to keep an eye on the future, and give strong consideration to Web-based software, which, he says, is the future of property management software.

Future Trends

If nothing else is true of software, this is: nothing stays the same. Computer trends come and go at lightening speed, and property management software is no exception. But there are a few trends on the horizon that property owners can prepare for now.

For starters, Ausmus says, property management software will continue to grow more comprehensive, taking care of not only basic management tasks, but also taking over tasks that haven’t yet made it onto the computer screen. “From ordering supplies to paying vendors to tracking marketing efforts, managers will soon find it all available in a single application,” he says, adding that the future will also see the integration of hand-held computers, such as the popular Palm, for tasks such as inspections, maintenance and data collection.

Schafer takes it one step further, saying that everyone from maintenance personnel to leasing consultants will soon use Palm-type devices out on the property to keep data as up to date as possible and lighten the load on the office’s manager. “Some find that they can purchase computers, Palms, software and training for maintenance software and pay for it with savings in less than six months,” he says.

Others say this future trend is a good four or fives years away. “There are certain things you can do with a wireless device that are great,” says Good. “But onsite people might not be ready to use them yet.”

Garza says that property managers should anticipate the Internet taking on a larger role in their everyday tasks, as software is provided online. “All you will need is a browser to access your data 24 hours per day, anywhere in the world,” he says. Software will be online rather than on a hard drive or internal network, and as high-speed Internet access becomes more common, managers can anticipate using the Web to run their properties.

Good agrees, saying that his company’s clients love using Web-based software to handle property management tasks. “They like the Web-based systems that they can access anywhere and anytime,” he says. “You don’t have to be in your office. More people are working from home, and they find they can be just as efficient with Web-based software at home as they can in the office.”

Michaux envisions a property management world that uses the Web almost exclusively to speed up and simplify property management. “Most, if not all, communities will have Web sites where maintenance requests and transactions will be handled, newsletters will be delivered digitally and residents will communicate among themselves,” he says. “As a consequence, managers will be able to fully leverage the resident information they already possess to create more cross-selling or up-selling opportunities.”

Small Properties, Special Concerns

For owners of smaller portfolios, automation might be a foreign concept. Alternately, these owners may have given up on a search for appropriate software, having found a year or two ago that most packages were designed for huge properties, offering scads of unnecessary features at a high price.

Thankfully, that’s changed. Software experts say that in 2001, there’s no reason even the owner of a single rental unit shouldn’t have management computerized.

“The small owner or manager is going to be able to use the same software and services as the large owner or manager via application service providers,” says Mullins. “Being able to lease the software and infrastructure, instead of having to spend a lot of upfront cash will allow the small owner or manager to be more competitive and efficient.”

Yardi’s Johns cautions that while smaller property owners might not think they need all the bells and whistles offered on expensive packages, they may want to consider such a purchase as an investment in the future; these programs will often change and advance right along with technology. “A product that includes regular upgrades of ongoing development is more likely to keep pace with technology and provide the manager with the features needed to attract higher quality residents and stay competitive in the market,” he says.

Finally, Schaefer recommends that smaller property owners look for a package that can be streamlined to meet their specific needs. Some suppliers, he says, will offer stripped-down versions of property management software at a lower price, making them perfect for smaller property owners.