Do you suffer from fear of crunching numbers? There are some great property investment software packages that take the sting out of calculations.
Property Investor Software: Comparison Analysis
Published on: Thursday 1 February 2007
Written by: Diana Clement
Property investing is all about crunching numbers and computers can crunch far faster than the human brain. It’s surprising, therefore, that so few investors use computers to analyse potential property purchases, work out depreciation, calculate mortgage repayments and even manage their property portfolio. As well as crunching the numbers and stripping away estate agent superlatives, computer software can display the data in the form of graphs, which bring figures to life.
The two main genres of software are investment analysis software that does the numbers, and property management software that can be used to track incomings and outgoings from a property under management. There is also body corporate management software, hand-held computer software, calculators such as mortgage and depreciation calculators and even property design software.
If you’re a dab hand with a spreadsheet, you can do most of this yourself. That is how many of the products listed in this article started. But if you want to learn how to set up macros, write visual basic code, and so on, for a few hundred bucks you can get someone to do the grunt work for you.
Property investment analysis
Property investment software is designed to take the guesswork out of property investment. Very experienced investors can sometimes do due diligence more or less on sight. But if you don’t want to be ruled by your heart, you can use property investment software to analyse the numbers. With most of these programs, you enter the purchase price, potential rent, mortgage outgoings, management fees if any, depreciation estimates, body corporate charges and so on. In just five minutes or less your software should be able to strip away estate agent superlatives and lay bare its investment potential, giving you a comprehensive view of the immediate (first year) performance of any investment property, plus a year-by-year analysis of the next 10, 20 or even 30 years.
Typically, you can enter standard information such as depreciation rates, tax rates, salary and income information, inflation rates, capital growth rates, manager’s fees, solicitor’s fees and so on. You also enter variables such as anticipated renovation costs, and fiddle with the numbers to run ‘what if’ scenarios.
The main programs on offer in New Zealand are:
- PIA (Property Investment Analysis)
- Acumen Property Investment Spreadsheet. There is nothing stopping investors downloading software from international vendors. Providing the program lets you enter local variables such as depreciation rates, tax rates, etc, you can use it.
These programs are quite simply when it comes to pre-purchase analysis even though the numbers and graphs they spit out are hugely powerful tools. These programs range in price from free downloads to more than $1000. The New Zealand-produced Acumen Property Investment Spreadsheet costs just $29.95. The spreadsheet was written by well-known author, financial planner and property investor Lisa Dudson.
Dolf de Roos’ REAP program is reasonably popular in New Zealand, but it’s expensive at US$445 for a download (US$495 as a boxed version). Having said that, most users I’ve met have covered their costs very quickly thanks to the ability it gives them to make better investment decisions.
However, if you want to analyse your entire portfolio on an on-going basis or compare potential property investments, you might want to buy a more complex product such as PIA, RevIQ, or RentalAnalyst.
My favourite is RevIQ. It has a lot of useful bells and whistles. For example, as well as projecting the numbers on a single property or property portfolio, you can also download from the internet property council data (land area, house area, construction type etc), council valuations, average rental prices for that area, comparable sales, 10-year capital growth data, census data and other useful information. It allows you to synchronise contacts and tasks with Microsoft Outlook, handy if you use Outlook for email, as you don’t have to enter details in two separate programs. It’s also possible to download Outlook contacts for hundreds of property investment related businesses from around the country. If for example, you need a valuer in Wanganui, a builder in Queenstown or a property manager in Twizel, you can simply look them up on RevIQ’s website and download the contacts.
But RevIQ costs an arm and a leg. Start off with the $798 purchase price, add the $120 compulsory upgrade and support package and then $20 for every data download and you could spend an awful lot indeed. (There are other pricing options if you intend to do a lot of downloads.
RentalAnalyst and PIA are very good programs indeed and cost just $129 and $295 respectively. Both also have handheld versions, so users can enter details in a cut-down version on their Palm Pilots or PocketPCs while inspecting properties and later link the data with a main PC.
Property management software
If you’ve bought a property, you might want to use property management software to manage the rents and outgoings, and produce reports for your accountant, mortgage broker or the IRD. There are a number of products on the New Zealand market aimed at residential and commercial investors as well as property managers. Some do a mixture of functions. The main ones are:
Residential (others worth trying)
Property management for real estate firms
These products aim to keep of your financial and related information in one safe place. With the more sophisticated residential rental programs, such as RentMaster and PC Property Manager, you can download bank statements and assign entries to specific properties or owners.
Once you’ve entered rents, disbursements, contact information, property inspection information and ownership details you can get a picture of the current financial position on one property, an entity or owner, or your entire portfolio. You can also estimate future positions and produce financial reports for GST and end of year accounts, making your accountant’s job simpler, and hopefully cheaper.
These programs have many useful features for landlords. Most have built-in tenant and legal letters, so if, for example, a tenant gets behind in the rent, click on the tenant’s details and have them automatically added to a 10-day letter, which is then printed and mailed out. Details of the letter are kept against the tenant’s name, so you can track how often they’ve been sent such letters. There are usually built-in tenancy agreements, bond forms, property inspection checklists and so on. Many programs can also keep track of emails sent to clients. You should also be able to upload digital photographs from an inspection to a property’s online file.
Products such as RentMaster, PC Property Manager, and PropertyReturns (free online commercial and residential property management software) can be used to manage properties on behalf of other owners. However, large real estate offices may want to look at products aimed directly at them. These include products such as Aspect Property Manager and VisionCRE*.
Aspect Property Manager, for example, is for organisations that manage properties on behalf of landlords. While a one-man-band property manager can get away with a product such as PC Property Manager or RentMaster, if you have more than one staff member using a networked computer system, a product like this is probably more suitable.
One nifty feature of Aspect is the ability to create web pages. If you’re an REINZ member, you can publish to the Realestate website. Or you can export data as HTML pages or to a database which can be used on a web page. That way whenever a property becomes vacant, it can be advertised at the click of a few buttons.
Palm or pocket-held computer software
In the property business it’s impossible to sit behind a desk all day. Sooner or later you will be visiting open homes, auctions, showing tenants around, doing inspections and so on. What if you could take your software with you? You could if you had a laptop, but wandering around an inspection with your laptop open is impractical. The other option is to get software for hand-held computers or smart phones. Some products mentioned above will also allow you to load any information you enter on the road into your main PC later. More useful products include:
Calculators are often free online. Many of the programs mentioned above have calculators built in. Below is a list of calculators from Acumen.
- Mortgage calculators
- Compound interest calculators
- Yield calculators
- Retirement calculators
- Budget planner calculators
Body corporate management
Other useful programs for landlords include the document factory, a CD-ROM of legal and other letters for landlords; you can design your own extension, move walls and re-design your house with software such as Viewbuild.
*Vision has not allowed the New Zealand Property Magazine to review its products, so we can’t tell you how well they work.
- Try before you buy. Make a shortlist of up to three products and download trial versions. Free trials work for a certain number of days or have fewer functions. This should help identify if there are any conflicts between your PC and the new software.
- Make sure you can use it. A developer may have decided that users should work in one way and it doesn’t suit the way you work. Most of the software reviewed in the Toolbox column was written by one-man bands so there is sometimes a lack of flexibility. If you find you just can’t understand how a program works, don’t use it. Try another one.
- Does it meet all your needs? Do you manage properties on behalf of others and need separate entities within your software program? Do you run a body corporate as well as rental properties? Have you got a commercial property? Do you need to keep trading entities and buy and holds separate? You need to ask all of these questions and more of the software you’re looking at.
- Do you pay a one-off fee, or a monthly subscription? REVIQ is one of the best pieces of property software I’ve reviewed. However, I’d baulk at the compulsory monthly fee for support and upgrades. Nor am I ever willing to rent software. I want to pay a one-off price and know it will work for me.
- Will it grow with your portfolio? In most cases this won’t be a problem. But if your software has a limit of five properties for the price you’ve paid, can you upgrade? If you suddenly find yourself becoming a de-facto property manager, managing properties for someone else, will your software cope?
- Can you export the data? As your needs change or a better product comes out, you might need to move on. If you’ve got 20 properties loaded into a program, five years of property inspection photos, bank statements, tenant history and so on, it’s going to be pretty difficult to shift it to a new product, unless that new product has sort of import tool. But if you buy software that lets you export data to Excel spreadsheets preferably, or an industry standard database such as Microsoft Access, then not all is lost. You should be able to import this into your new product.
- Does the publisher listen to its customers? In my experience software publishers have an appalling attitude to customer suggestions. I’m forever sending suggestions to websites and software houses. Sensible suggestions, because I always look at it from a usability point of view. Most of the time I’m ignored. The next biggest response is total fob-off: “Great idea, but our users don’t work that way.”
One publisher, and he stands out a mile for this, once told me that he puts all suggestions on his to do list, prioritises all the jobs on the list and adds them when he can to the product.
It’s worth emailing the publisher a question and see if they reply. If they can’t be bothered replying to a potential customer, then think what it will be like once you’ve handed over your dosh and bought the product.
This article was republished from Landlords.