Property management software allows users to merge their personal and business accounting in a single place. For individual landlords, this means convenience and savings. Newer versions of these packages can be placed on a mobile or tablet platform and accessed online, a feature that "allows users to log in from anywhere," as Joe Sidebotham of Goleta, California-based AppFolio notes. "This makes it even more convenient for landlords."
Landlords can store tenant and vendor contact information, as well as information on lease terms and records of security deposits and rent payments. The software can flag late payments for assessment of any overdue fees set by the lease, and can keep track of damage expenses that will be charged to the initial deposit. Notices can be sent out if necessary, and such software can also alert landlords when vendor and loan payments are due.
It's essential for landlords to understand how their rentals are affecting cash flow, and contributing to their individual bottom line. Although budgeting for rental property can be quite a chore, property management software can track income and expenses for individual properties, and calculate profit and loss on an ongoing basis. Some versions will integrate both rental and personal finances, and can track credit cards, bank loans, retirement and investment accounts. Landlords can also categorize their business income and payments, and also keep tabs on deductible expenses.
Tax considerations are never far from a landlord's budget and accounting work. The IRS allows its standard business deductions to individual landlords, but these calculations mean careful recordkeeping. Property management software can keep tabs on business vehicle mileage, home office expenses, utility payments, maintenance, labor costs, advertising, insurance -- as well as the cost of office tools such as software. Some packages also can perform tax preparation, allowing users to create Schedule E and Schedule C reports or export the numbers to a dedicated tax package.
The use of management software has been standard for larger property firms over the last decade; Sidebotham of AppFolio reports that "we've been around for about seven years, which is about average in this sector." For the individual landlord, developing a few rentals into a viable, profitable enterprise means keeping constant track of profit and loss from individual properties, running the tax numbers when needed, and recording invoices, payments, leases, and tenant information. With a software package performing these tasks, a rental owner can dispense with the traditional ledgers and spreadsheets and focus more time on marketing and growing the business.