Are you a landlord? Here’s why you should consider investing in Management Systems

If you have been to a hotel lately, you might have noticed that waiters are no longer running around taking orders from tables and then back to the kitchen to convey the orders to the chef. They simply key in their orders on a standalone system and the chefs receive the information promptly. Even menus are disappearing from tables. Talk about contactless service.

Similarly, doctors’ offices are not filled with piles of dusty patient files. In fact, a modern doctor’s office has a chair and desk at most. Even government offices are now boarding the minimalism train. To what do we owe the disappearing of physical paper trails?

Management systems have become a popular and necessary tool in many industries. The property industry too is embracing the Property Management Systems (PMS) software. These are solutions that combine and ease different processes in a business entity. In a rental business for instance, a PMS enables the landlord, agent or tenants to run day to day or monthly operations online as opposed to tedious, manual work that involves hundreds of receipts, messages or a chaotic WhatsApp group - PMS are the new way of running rental businesses.

Njui Josphat, a software engineer and Lead Developer at Dyna Strategic Solutions, takes us through everything we need to know about them:

Njui came across the idea of Property Management Systems back in 2014 when they were not so popular in Kenya. A relative who was managing their rental business challenged him to think of something that could save her the tiresome monthly exercise of sending invoice messages to every tenant.

She yearned for an automated system that would save time and money. Njui got to work and built something that could ease the relative’s tedious tasks. While working on the project, he realised that the rental market was basically dealing with a myriad of challenges that needed solving.

Managing property

Tracking rent arrears was a major pain point. For landlords to establish who has paid, who has not and the ones with balances, they had to go through countless receipts, and look through their records. The process takes weeks, and before an agent or the landlord can generate reports and send alerts to those with arrears, another month is gone and it is time to repeat the process.

Big management companies with hundreds of properties in their portfolios have to deal with thousands of receipts. Collecting these receipts from tenants manually is not only time consuming, but also tiresome. Then there is the issue of maintenance and repairs. In any rental property, common areas need routine maintenance while individual units will require plumbing or electrical repairs from time to time.

“In high-end rentals, some of the seemingly minor issues like overgrown hedges or a dirty swimming pool can cause friction with tenants,” says Njui.

On the landlord’s end, relying on agents to deliver reports after managing the property manually is a gamble. The industry struggles with unethical agents who may charge more, lie about arrears and sometimes play around with the numbers before remitting rent collections to landlords.

“Landlords have confessed to losing millions before Property Management Systems were introduced,” says Njui.

It is especially difficult for those that live abroad to manage their property. Sometimes the rent rates in a location increase and the landlord is not aware of it, the unethical agents just revise them and keep the additional profits to themselves.

Finally, landlords are legally tasked with keeping proper records for purposes such as tax remittance, legal issues, and in case of disputes with tenants. They are also required to adhere to data protection laws while keeping tenant records. Keeping track of every tenant’s file takes up plenty of space and time. Imagine keeping receipts and lease agreements from 20 years ago. You would need an entire room in your house for this.

Poor Reception

While PMS seemed like the perfect solution for all these challenges, Njui says that the reception was not so good seven years ago. There were challenges such as integrating the system with banks for the purposes of processing payment details. Players in the property market were also sceptical of tech solutions. 

“This had a lot to do with the reputation created by the pioneers of PMS. They would install systems for clients and abandon them without updates or support. That created fear among the target users” explains Njui.

Internet penetration was also an issue. Statistics show that only 16.5 percent of the population had access to internet back in 2014, though the numbers have increased gradually over the years. With slim profit margins, especially for management agencies, installing internet just to access PMS services was an unwelcome cost.

With time, internet penetration improved and people began to embrace technology. Property Management Systems also improved in quality, while financial institutions discovered opportunities in management systems.

In 2015, for instance, Njui notes that M-pesa integrated their services to accommodate management systems, and this created an opportunity to improve PMS. Soon after, popular banks began integrating too.

The pandemic was also a major influencer in the shift from manual management to PMS. With everyone suddenly working from home and everything taking place online, the idea of running a rental property online was not so strange, even to the most conservative landlords.

Everything in one pot

Property Management Systems have evolved as different developers penetrate the market. Depending on the developer, the system can offer different solutions to landlords, agents and tenants, ranging from tenant screening to record keeping, generating reports for landlords and providing updates for tenants. Njui explains that most PMS are double-sided.

The landlords, on one hand, will simply operate from an app which gives them notifications and reports. Instead of dealing with the raw data, they only get refined reports of what matters. The reports include expenses incurred in maintenance and their overall balance after all the deductions are made.

In the reports, if there are recurring issues such as tenants constantly requesting for repairs of broken showers, the landlord can easily establish whether there is an issue with their supplier or their repair team and make necessary changes.

Tenants on the other hand will have access to a dashboard where they receive all necessary communication while processing their paperwork. Once they move into their unit, they are able to process their lease agreement from the platform, view their invoices and balances as well as give feedback, file complaints and request for repairs. The system also shows the status of repairs - whether they are resolved, pending or ongoing.

And lastly, they can update their payment details and generate receipts from the system. By using the dashboard, they do not need to constantly engage the agent or landlord when issues arise. No one appreciates a landlord knocking on their door early in the morning to demand for payment or deliver a receipt.

For continuity of administrative work, PMS have an admin dashboard. An admin updates the data on the platform. For instance, when a tenant moves out, and another one moves in, that data has to be updated. If there are ongoing repairs or notifications that need to be sent to tenants, someone has to take care of such tasks. The admin works for the landlord and they could be the landlord, their agent or someone they trust to manage and update data.

Expanding scope

As mentioned, different developers will offer different processes on their designs, and it’s important to inquire on the capabilities of a systems before committing. However, technology is not stagnant. It is a dynamic field, and even systems grow gradually - PMS have become smarter and more automated over the years.

In the past, for instance, agents had a lot of manual work in confirming the credibility of payment receipts submitted online. Njui notes that sometimes people would submit forged receipts and agents had to spend weeks, reconciling the data, however, system upgrades have curbed such fraud. They can now detect faulty documents and flag them.

Systems are also integrating other aspects of running a rental property such as marketing and screening. When tenants are moving to a different location, they can key in their budget, preferred location and house type. If there is a landlord on the system with a unit that meets the specifications, they will easily connect with the tenant. This eliminates the process of going through separate property listings (which are sometimes unreliable).

“One of the biggest challenges with listings is that units move fast, and by the time a tenant calls, the unit is booked or occupied, even though the listing states otherwise,” says Njui.

By having marketing, administrative processes and general management in one pot, tenants and landlords can reduce the time they spend on the internet looking for new units or tenants.

Some systems are also considering a reservation model whereby tenants can always place a booking in their dream properties. If one has always wanted to live in a particular location or apartment, landlords in that area will get have a comprehensive list of leads to be used anytime they have a vacancy. Some systems have also integrated tenant screening- one of the most important steps in rental management.

Avoiding risky tenants can save a landlord from headaches. One of the biggest considerations in tenant screening is adding the option of information sharing-whereby if a tenant is moving from one apartment to another, and both landlords are using the system, then the tenant can allow the second landlord to access their history.

Such access gives the landlord an idea of how the tenant interacts with other landlords. However, this information sharing option is voluntary for the sake of data protection. Even then, a tenant who is not forthcoming with their history is obviously suspicious.

Overall, the systems are expanding to incorporate more processes. In a few years’ time, one might not need a caretaker to read utility bills. Such growth will improve transparency while easing the chaos in the rental market.

Factors to consider when choosing a Property Management System

Reliability and Security: Ever been to a hospital and the system hang? There is nothing as a system that is constantly failing. As for security, technology is great until there is a data breach. Ask developers to take you through their security features before signing up. Also research and understand what security means in the technology world. If possible, consult a third party.

Ease of use/Simplicity: You do not want to spend countless hours training staff or tenants on how to use the system. Work with developers who have a simple, easy to use interface.

Support: System failures should be expected where technology is concerned, after all, systems are man-made. Even the best system is worthless without support. Ensure your PMS provider is available on call whenever you need them.

Cost: Different developers will charge differently. Some will have a flat rate and others will charge a percentage of the revenues - PMS generally reduce the time you spend on tasks and most are affordable, however, discuss the cost and flexibility of charges and ensure your service provider targets landlords or agents in your market.

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