By: Michael Sebastian, Industry Principal, AppFolio Investment Management
Quantifying the return on investment (ROI) of real estate investment management software isn’t as simple as, say, measuring returns on a multifamily distressed asset recovery project. Investment projects have defined metrics — initial investment, accretive maintenance costs, cap rate compression variables, and net equity out at disposition — that fit perfectly into the formula.
By comparison, calculating ROI on real estate investment management software requires a sharper focus on processes and organizational productivity, so you can fully understand how much not leveraging digital technology is truly costing your company.
Even if you already use a real estate management software platform, it often pays to reevaluate your technology periodically. Savvy investors expect, and deserve, a robust system that enables efficient communication channels and on-demand reports.
For example, automating K-1 sharing allows individual and broadcast investor distribution in under three minutes. Plus, when investors can access relevant information online at their convenience, you eliminate frustrating phone tag and the back-and-forth Q&A often involved in email communication.
Let’s get started.
The communication systems you have in place today directly impact profitability. If you’re still relying on non-digital communication channels to keep investors in the loop, your internal costs may be depleting your profit margins. Communicating across disparate channels such as phone calls, mail, or even email can lead to delays or even missed opportunities if not all members of your team have access to the full conversation history and the latest communication from each investor. Mail delivery delays may even cause you to wait, and wait, and wait unnecessarily for responses. Automating communications — the cornerstone of successful investment management and syndication — maximizes efficiency and reduces staff requirements, saving time and money. Here are a few ways that investment management software streamlines communications:
- Integrated CRM tools help organize and track all investor and prospect details for optimal relationship management
- With bulk emailing capabilities, you can email your entire network with a click of a button
- Investor portals allow LPs to check the status and performance of their capital in real time. Gone are the days of having to wait for quarterly updates by mail.
Going digital has been shown to reduce capital-raise time by as much as 50 percent compared to traditional fundraising methods. It also affords the GP much greater insight into which prospects may be more interested in the deal than others. If you’re preparing to switch to digital fundraising, make sure to keep an eye out for the following must-have functionality within the platform you choose:
- Your platform should allow the syndicator to actually see who has read an offering. With this information, you know which prospects it makes more sense to follow up with.
- Be sure it provides embedded document-execution tools, reducing the friction and lag that can come with having to rely on a third-party service.
Comparing Real Estate Management Software Platforms
When talking to potential vendors, always ask how their solutions improve ROI. If they cannot explain how their system provides a user-friendly platform for investors, streamlines fundraising activities and lowers payroll costs, move on. A reputable real estate investment management software provider is proud to talk about their products and their client success stories.
Your system should align with your company’s financial goals and client needs perfectly. Look for a provider that offers:
- Experiences that build investor confidence and demonstrate your commitment to enhance asset performance and ROI,
- Fundraising capabilities that maintain team productivity and control costs,
- A seamless solution to efficiently manage the organization from top to bottom
- Automation opportunities that allow the free flow of data between property management and investment activities, resulting in reduced cost and complexity when managing multiple solutions
Every day spent relying on multiple spreadsheets, voicemails, printed documents, pencils and paper to communicate and provide service for investors costs you time and money. Instead, that money can be channeled toward improving investor relations and streamlining your operations. Depending on what type of system you are using now, positive ROI could appear between four and 18 months after the transition to a digital system, maybe sooner. If you’re ready for the change, AppFolio Investment Management can help.
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The views and opinions expressed in the preceding sponsored article are those of the author and do not necessarily reflect the views of The DI Wire.