What to look for in real estate investment management software and systems

This blog was written by Amy Bruton, Consultant at REdirect Consulting.

REdirect, an MRI Software Consulting Partner, is a leading provider of real estate technology solutions with a demonstrated record of assisting hundreds of clients internationally and across the real estate industry to attain their technology and business goals. Learn about how REdirect has helped new and existing MRI clients leverage their software investment.

Before you invest in a new software system for your business, it is vital that you evaluate it thoroughly to ensure that you are getting the best product for your needs. When it comes to real estate investment management software, there are many different tools available on the market. All of these tools have slightly different features, functionalities, and benefits. So how do you know which one is right for you?

In this article, we discuss how to evaluate a new investment management system and what you need to take into consideration before you make your decision. We will also help you understand who needs to be involved in the process and what system integrations you should consider.

What are you trying to achieve?

Many firms are still wasting time trying to manage everything in spreadsheets. If you’ve been frustrated by the limits of spreadsheets, spent precious time waiting for large files to download and render, or lost hours creating a single report, then it might be time to invest in a more sophisticated system.

The main thing you are trying to achieve when you implement an investment management software system is the streamlining and automation of as many of your processes as possible. Streamlining and automation allows you to avoid duplication of effort and wasted time doing unnecessary manual entries, since the system ties everything together for you.

Virtually all investment management software systems allow you to record and monitor financial transactions, track the performance of each investment, and create reports. But beyond this, things can get complicated, and the software you choose will depend on your needs and what you want to achieve. The right system will give you real, actionable insights that you can use to improve the performance of your investments and provide the best possible service to your investors. Here are a few key features you might need to consider, depending on your needs:

Waterfall calculations

A distribution waterfall shows the way in which capital is distributed to relevant investors – in other words, how it “flows down” to the various parties involved. Waterfall calculations are complicated, but the right system will be able to handle them in a way that saves you time and makes them easier for everyone to manage and understand.

Equity rollups

If you have several companies under the umbrella of a larger organization (or intend to), you will need to consider how your investment management software copes with the financial complications this can bring.

General Ledger impact

The ability to define how the General Ledger (GL) is affected by different types of transactions. You might even need to specify that certain transactions do not impact the GL at all.

As you implement and roll out your new system, set the expectation that you might take much of your firm’s work into your new system, but you might still end up in spreadsheets on occasion. Spreadsheets are still a useful tool, so do not be afraid of turning to it when you need to. The point is not to get rid of spreadsheets entirely, but to ensure you are using the right tool for the right job.

Who to consult in your organization

Precisely who will need to be looped into this process depends on your organization’s structure. You will need to get input and buy-in from all affected stakeholders, taking into consideration both front-end (owner/investor) and back office expectations. Ensure you leave enough time to explore everyone’s expectations and gather a comprehensive list of requirements.

  • You will likely have a fund controller overseeing investment activity. This person will be key to the selection process, as it is their job to ensure that you are compliant with all relevant regulations and maximizing the return on all investments.
  • Fund accountants who will be the day-to-day users of the investment management software are also important stakeholders. They will be best placed to inform you of the minute details of how things work in your organization, since they understand the nuances and complicated processes and structures that others might miss. It’s generally best to avoid involving every member of the team: stick to a few key people.
  • Finally, it’s also smart to get your investor relations team involved in the final stage of the process. We are not implying you should give them decision making power over which system you choose, but they will inform and guide future reporting requirements.

A note of caution: be very wary of handing your investors a “blank check” when it comes to what is available. Otherwise you might end up with requests that you cannot honor or that would be prohibitively expensive. One way to mitigate this is to narrow down your choice of software system to two or three potential options before asking your investors for their input on the final choice or on specific customizations.

Tying your systems together

Last but not least, you will need to consider how the different systems you use work together. Your choice of investment management software might vary depending on what other systems you have in place and how well they work with the software you’re considering.

Consider integrations between systems, planning for immediate or future customizations (since it is unlikely you will simply purchase a product “off the shelf” as it is), using data from the system for reporting, and beyond. Remember that the aim is to build a sophisticated and seamless investment management system that saves you time, saves you money, and allows you to focus on tasks that cannot be automated. Certain systems focus on aggregating data across multiple systems while others are positioned to capture most data within the platform. For example, MRI’s Investment Central solution excels at aggregating data across multiple property management and accounting systems.

Many of the best real estate investment management software systems on the market offer extensive customization options. Anything from the look and feel of the output from your system (such as financial reports), to the level of detail you require in your reporting, can be customized. Take the time to assess which customizations will meet your business needs and your investors’ expectations.

Need some additional support?

Implementing a new software system is a learning curve and can involve a significant initial investment of time, money, and other resources. But in the long run, you will not only save time and grow your revenue, but also increase accuracy and reliability in your reporting and allow you to provide the best possible service to your investors.

No matter what stage of your journey into real estate investment management software you’re at, the experienced team at REdirect can help you. Whether you’re looking for initial advice on which system to choose, support with implementation, or help to train up your team on the new software system, get in touch and we will be pleased to talk you through the ways that we can help.


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