Technology makes new leaps and bounds in the areas of property management, construction management and Web-based mortgage and property listings.
Take a snapshot of the present property management software market and it would look like a blur. In the past five years, property management software, long dormant and a captive of the DOS world, began to change rapidly when it plunged into producing Windows-based applications (although other industries had embraced Windows much earlier). Next came the Internet and vendors moved to browser-based applications, application service provider (ASP) software and e-commerce.
On the road to embracing those new technologies, property management software companies took the opportunity to re-engineer their products and expand their utility to property managers. The biggest change in property management software across the board has been a change from a task-centered orientation to a process-based one.
That was achieved by incorporating more features that emulate the workflow of property managers and automating many tasks and eliminating redundant input of data - often the same data needed by different users for different purposes throughout the property management cycle.
In addition to moving to the Windows and Internet environments, the key players in property management software have sought to provide integrated solutions that go beyond simply offering accounting and rent roll modules to providing full-fledged suites of applications that look alike and work alike. Nearly all of the players offer applications that handle accounting, budgeting, leasing, marketing, compliance and rent rolls, and many also offer tenant-screening components or work order functions.
Much like the real estate industry it serves, the property management software market is highly fragmented with strong dominant players, and specialists with niches in one sector or property type such as commercial, residential, affordable housing or multifamily. Others specialize by building their application suites around a strong central program such as a database, accounting or leasing.
RealPage is an acknowledged leader in serving multifamily properties and has no commercial products, while AMSI and MRI hold strong market positions in both commercial and residential sectors. Yardi Systems is exceptionally strong in the small to midsize property management niche. IPM specializes in affordable housing. Timberline is adept at lease administration and construction.
"There is definitely a move toward Web-based applications, centralized databases and ASP programs, particularly by managers of large portfolios," says Steve Winn, chairman of the board and CEO of RealPage, Inc., Carrollton, Texas.
With more than 20,000 apartment communities using its software and services, RealPage holds a strong lead position among software vendors serving the multifamily market. Its main thrust, however, has been the development of its new OneSite, a Web-based property management system. According to Winn, RealPage recently received a boost in its Web development efforts with a $20 million investment package led by Seren Capital Ltd., a Dallas-based private investment group.
"Moving to the Web has definite advantages," Winn says. "It simplifies operations, and it provides ease of management with low maintenance costs, no installation problems and much greater functionality. Our goal at RealPage is to build systems that allow property owners to respond more quickly to supply and demand conditions in the market."
By automating and aggregating many property management functions, software such as OneSite improve productivity and lower costs. In one scenario posed by Winn, by simply centralizing and aggregating invoices from many sites and handling them electronically, back office process costs, which can be as high as $7 to $10 per invoice, can be significantly reduced.
As an integrated solution, OneSite offers property managers extensive tools through a suite of applications, including modules for property, leasing, rent roll, revenue management, facilities management, accounting, budgeting, compliance, distance learning and e-commerce through OneSite market.
Houston-based AMSI, a division of Geac Computer Corp. Limited of Canada, bridges both commercial and residential properties, and its products and services are used to manage more than 13,000 properties throughout the United States. AMSI, which has property management programs running on two platforms (client-server and legacy/DOS) at more than 14,000 sites, has recently introduced its own Internet property management software called Evolution.
"Evolution automates the complete onsite management process, from leasing to purchasing to Web payments and service," says Michael Mullin, general manager for AMSI. "Our integrated product offering will give the property management industry the best possible information in a seamless, integrated manner, allowing them to make sound business decisions."
Mullin says that more than half of the publicly traded REITs run AMSI's Starsite applications. In addition, AMSI recently announced an alliance with SafeRent, Inc., a leading provider of online credit and risk management services to the apartment industry. The two companies have agreed to integrate their Internet-based applications to centralize onsite leasing and management activity. SafeRent's online applicant screening services provide an objective and accurate leasing recommendation within 30 seconds.
Mullin says that typical costs for implementing AMSI's systems are approximately $100 per user for traditional software and between $200 and $250 per user for ASP or Web-based versions.
"Moving to Web-based applications will reduce costs and boost productivity for property managers," Mullin says. "Right now it costs anywhere from $6,000 to $1,000 per site per year to support software systems in a distributed model."
"Not everyone buys into the ASP model totally," says Bryant Shoemaker, vice president of product development at Yardi Systems, Inc., Santa Barbara, Calif. "Some property managers want to buy the software and run it on their own servers and store their data on their own servers as well. The advantage to a browser-based solution such as Yardi Voyager is a sharp reduction in hardware costs."
More than 20,000 companies use Yardi's property management and asset management tools. Yardi's product line includes a comprehensive range of Windows-based and Internet-enabled applications, including Yardi Enterprise, a 32-bit Windows client/server application that runs on an MSDE SQL server or Oracle database. It is a fully integrated accounting and financial reporting system designed for commercial or residential property management. Yardi Voyager, one of the first Web-based property management products to hit the street, Web-enables Yardi Enterprise property and asset management applications.
Costs for implementing property management systems vary widely based on company size, customization needs, hardware costs, etc., according to Shoemaker.
Lincoln Property Company, one of the five largest residential and commercial real estate firms in the nation, recently selected Yardi's centralized database and Web-based Voyager products to manage 100,000 multifamily units.
"Property support will be reduced," says Dennis Streit, CFO of Lincoln Property. "With the current software system, the support team must manage and support 150 separate property databases. Yardi eliminated this high demand for support. Redundant data entry will be eliminated."
According to Shoemaker, Web-enabling property management is the first step in a communications revolution that will dramatically transform how the real estate industry accesses and exchanges information. "You'll have property managers or investors accessing data from devices like Palm Pilots and Web-enabled cell phones," Shoemaker says.
Wireless communication is becoming more important for successful property management. iTendant, an Atlanta-based company, has developed a property management tool that allows for wireless communications between tenants, property managers and building engineers.
The Web-based system eliminates paperwork by allowing tenants to report a maintenance problem from their own computer by logging into the system, filling out a form and "clicking" it directly to an engineer or to the approving supervisor. The engineer receives the work order through a wireless device, such as a pager, cell phone or personal data assistant (PDA), and the tenant receives an e-mail confirmation.
Property managers and engineers are able to organize and prioritize their work orders, allowing them to complete them more quickly and efficiently. Upon completion, the tenant receives another e-mail, to which he can respond to the property manager with comments about the work completed.
"The system allows the property manager to work better with tenants," says Stephen Hassett, president and CEO of iTendant. "They have more time to worry about bigger tasks, not a burned-out light bulb."
iTendant costs office properties 3 to 5 cents per square foot per year; multifamily residential properties, $3 to $5 per unit per month. (The company will soon add retail and industrial property management.)
Property management tools such as iTendant can be an important selling component to a tenant looking for office or residential space. While tenants used to have to make multiple calls for any building problem, from a burned-out light bulb to a leaky faucet, with online reporting systems they can file their complaint or work order without picking up a phone or filling out paperwork. Property managers and engineers can use the technology to work more efficiently and, ultimately, keep their tenants happy, thus building a better relationship and reducing turnover. "They also can use the extra time to perform preventive maintenance," Hassett adds.
As technology becomes more commonplace in property management, competition for the next best thing is heating up. For example, Management Reports International, a Cleveland-based supplier of property management tools to more than 5,000 installations worldwide, has been one of the first firms to put its applications online.
According to Winn of RealPage, the demands for information from investors, owners and the capital markets have raised the need for managers to access, manipulate and communicate information in real time. That simply furthers the need for technology in the real estate industry.