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How Real Estate Investment Software Benefits Rental Property Analysis

Updated on June 26, 2013

Real estate investment software solutions (developed by others and ready to download online) are often avoided by some real estate agents and investors when they really shouldn't be avoided.

Most likely they are avoided though because the idea of paying for real estate investment software that can be replicated on a spreadsheet program like MS Excel° doesn't sound like money any prudent person would want to spend.

Fair enough. I've been there.

Because I tend to be a "do-it-yourself" type of person about most things. Unfortunately, however, often it has cost me both financially and time-wise. And in many cases, my result was never as good as a paid service (e.g., the tune up on my car). But I'm learning.

Some things are better left to the experts, and it doesn't always pay to try and "reinvent the wheel". All of which, of course, explains why real estate investment software applications were introduced several years ago and are commonly in use today.

On the one hand, seasoned pros and novices alike understand the importance of conducting a real estate analysis for investment property, and on the other, that it's smarter and actually financially prudent to use a commercial real estate investing software solution than to do it manually.

Okay, but for you "die hard" skeptics that are not convinced, this article was written to show you various ways you will benefit by using third-party real estate investment software.

Naturally, we assume that you already know that real estate investing is all about number crunching, and that the object of conducting a real estate analysis on rental income property is to arrive at the property's cash flows, rates of return, and profitability correctly. So let's get started.

1. You Get Required Data

The most important requirement for a real estate analysis is the property's financial data. It must be comprehensive and concise enough for real estate investors to make smart investment decisions.

But this can be a challenge for beginners because knowing what data is most important for real estate evaluation is not always that obvious. Moreover, knowing how to structure the data in a way that can be easily understood typically confuses novice analysts.

Real estate investment software solutions (or at least the better ones) know what financial data should be included and how to structure it. So there’s never a need to worry about omitting something that's essential. You simply fill in the forms.

2. You Get Quality Reports

Reports, of course, are the life blood of a real estate analysis because they are how you present the property to investors, partners, lenders or colleagues..

Therefore they must be top-quality (they should look professional), contain all the essential financial data, and likewise be formatted in a way to ensure that all the numbers are displayed in a manner that can be easily read and understood.

Moreover, knowing which reports to create can raise questions for beginners.

How do I present a simple financial "snap shot" of the property? How do I create projected financials? Which report would best include the rates of return, tax shelter elements, and time value of money consideration?

Commercial real estate investing software solutions do create reports. Just be aware that both the quality and quantity of reports will vary amongst providers. So take some time and preview what they offer before you purchase.

3. You Get Built-in Formulas

Knowing how to compute the dozens of formulas required to create a meaningful real estate analysis can be avoided with real estate investment software.

With third-party investing software, you don't need to to learn those formulas, or to make those calculations. The formulas are built into the solution and calculated automatically in the background as you complete the forms.

The better software programs even compute for taxes and time value. So arriving at depreciation allowance, cash flows after taxes, net present value, and internal rate of return is a breeze.

4. You Save Time

Why would you want to "reinvent the wheel" and invest the time to manually create your own real estate analysis spreadsheet?

We've already considered three issues that you'll need to confront and overcome, but just as importantly, a third-party commercial software solution will save you countless hours of tedious work.

Best of all, quality real estate analysis software solutions are readily available on the web at surprisingly affordable prices (commonly below $300).

5. You Save Money

Continuing the thought, remember, "time is money". So by not spending your time creating a real estate analysis spreadsheet, you save money. How much money you save depends on what you consider your time is worth.

But there's more. There's also an "opportunity cost". Because each hour you spend in front of the computer "reinventing the wheel" costs you an opportunity to devote that time to real estate investing (where you make money).

About the Author

James Kobzeff is a real estate professional and the owner/developer of ProAPOD - leading real estate investment software solutions since 2000. Create cash flow, rates of return, and profitability analysis on rental property at your fingertips in minutes! Learn more at www.proapod.com

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