Real estate investment software is one of the best tools real estate investors and professionals can use to analyze and evaluate multifamily property.
Good real estate investment software provides the forms, makes the computations, and creates the reports required for a real estate analysis. Any user (experienced or not) can create professional-quality rental property reports for a myriad of reasons, such as decision-making, or as property presentations to buyers, sellers, colleagues, partners, or to lenders. All within minutes.
Moreover, real estate investing is all about the numbers. Therefore, real estate investors who are considering real estate investment opportunities look for and make their investment decisions based upon the bottom line. So real estate investment software becomes an essential tool for real estate analysis because it provides quick and concise cash flow, rate of return, and property valuation numbers.
Though most real estate analysts prefer to buy real estate investment software, it should be pointed out, though, that you do have other options.
You can, for instance, scratch out the numbers with a pad and pencil, or perhaps make a hasty rule-of-thumb calculation off the top of your head. But it should be obvious that these approaches, although maybe useful in limited cases, do not provide the best solution. They clearly do not provide the deep property analysis required to make a smart investment decision, nor do they include the data likely to sway the opinion of any other person, entity, or institution like a partner or lender.
You can also use Excel and develop your own spreadsheet. The problem here is time. It takes countless hours to embed the computations properly, and to format the forms and reports, even if you’re familiar with Excel. If you’re not familiar with Excel, then triple the time.
Before you pursue those options, though, be mindful that successful real estate professionals do not waste time or effort reinventing the wheel. They prefer to invest in real estate software so they can spend their time generating moneymaking deals.
But I digress. So let’s get back on topic and look at what you should expect in good real estate investment software.
1. Easy to learn and use – You want simply to enter the values and have the software do the rest. You never want to look and wonder, “What do I do next?” To check, examine the website. Remember that the same company praising their software publishes the website. If the website is not well organized and informative, or if its lack-luster and confusing, the software might not be what you want.
2. Unlimited units – You want the ability to analyze one unit or a thousand units, or even more units if necessary.
3. Loan amortization – You want ample control over the financing assumptions. For example, you want the ability to enter multiple loans, the flexibility to enter the loan either as a loan assumption or as a new loan, and then have it computed as either a fixed or interest-only rate.
4. Crucial rates of return – You want the real estate investment software to calculate cash flow returns and loan ratios such as cap rate, gross rent multiplier, cash on cash, operating expense ratio, net operating income, debt coverage ratio, loan-to-value ratio, break-even ratio, and profitability index.
5. Tax shelter computations – You want the ability to determine cash flow after tax as well as your tax benefit or loss. To do this, the real estate investment software must include computations for tax shelter elements such as cost recovery and mortgage interest.
6. Time value of money – You want the software to create computations involving the time value of money such as internal rate of return and net present value. Why? Because you will discover that in real estate investing, the timing of cash receipts can be as important as the amount.
7. Concise, top-quality reports – You want printable reports that are easy to read and have eye-catching appeal. Remember, you might be trying to influence the opinion of a buyer, seller, colleague, or lender regarding this property, and they might have to make their decision based on the reports even before seeing the property.
8. Upgradeable versions – You want the ability to “upgrade” from a less-than-platinum-grade-version to a platinum-grade-version without having to re-purchase the platinum-grade version at full retail price.
9. Technical support – You want to have open access to tech support in the event of a question or problem. Preferably, email and telephone support . Exercise caution if the company or developer appears overly allusive–there is nothing more frustrating than encountering a problem and then not being able to talk to the software developer about it.
10. Affordability – You should be able to find very good real estate investment software on the web for about $300. Which is very affordable given the fact that you will be able to start working with income-producing property immediately.
11. Customer satisfaction – You should examine the names, professions, and titles of customers who have submitted a testimonial. If you can relate, then you may have a winner.
There are other things you want real estate investment software to provide such as seamless printing, picture function, branding and name-rider integration, email capability, help file, Windows compatibility, and so on. The point is not to be hasty. Spend time on each website looking around to be sure you get the essentials and perhaps a little extra at the best price possible.