The downsides of using Excel in real estate investment

Excel has long been a staple in the world of real estate investment. It’s used for budgeting, forecasting, and keeping track of assets and liabilities.

While Excel may seem like a convenient tool, it falls short in handling the complex and dynamic demands of real estate investment. Issues like human error, file corruption, and lack of real-time collaboration can hinder your investment operations. It ultimately lacks the technology and control that enables businesses to maximize efficiencies, minimize risk, and truly gain a competitive edge in the market.

In this blog, we highlight the challenges faced when using Excel in real estate investment.

Why is using Excel is bad for real estate investment

The use of Excel in real estate investment, though common, has numerous drawbacks. Its limitations quickly become apparent when dealing with large-scale investments or multiple properties.

Here are the specific issues you might encounter when using Excel in real estate investment:

Human error

Human error is a significant concern when utilizing Excel for real estate investment purposes. The manual nature of data entry and calculations in Excel creates ample room for mistakes. Small errors like a miskeyed number or a wrong formula can lead to inaccurate analyses and potentially costly problems.

There is also a lack of workflow automation when utilizing Excel. This not only increases the risk of human error, but also makes the process more time-consuming. This can have a significant impact on the efficiency and accuracy of real estate investing processes, potentially affecting the profitability and success of your investments.

Files can be corrupted

File corruption is a common issue encountered in Excel. When an Excel file gets corrupted, the data within it can become inaccessible. Recovering data from a corrupted Excel file can be a tedious and sometimes unsuccessful endeavor.

The loss of crucial data due to file corruption can lead to misguided decisions, posing a risk to the success of your investments. The time spent recovering corrupted files could delay critical decision-making, potentially leading to missed investment opportunities.

Cannot be accessed from multiple locations

One of the major drawbacks of using Excel in real estate investment is its limitation on multi-user access. If a team is working from different locations, sharing and accessing Excel files becomes a challenge. Each user would need to wait for others to complete their part and share the file, typically via email, before proceeding, which can delay decision-making.

This lack of real-time collaboration across locations can also impact the accuracy and reliability of the data. If two team members are working on the same file independently, there’s a risk of overwriting each other’s data. Such issues can lead to miscommunication and misinformation, potentially impacting the success of the real estate investment.

The top 5 reasons you should use a dedicated real estate investment software instead

Transitioning to a dedicated real estate investment software can significantly enhance your operations. Unlike Excel, this software is designed with the specific needs of real estate investors in mind.

Here are five compelling reasons to make the switch from Excel in real estate investment:

1) Facilitates collaboration

Real estate investment software allows multiple users to access and update information in real-time. This dynamic platform will keep everyone updated as changes occur. This becomes essential when handling various projects or when teams are spread across different locations.

Excel doesn’t allow for real-time updates accessible to everyone simultaneously. This traditional setup can result in delayed communication. There is also a risk of working with outdated or inconsistent data if someone forgets to share their updates or if two people make changes to a document independently.

Improved collaboration is essential for real estate investments. It ensures that decisions are made based on the most current and accurate information, which is crucial for mitigating risks and maximizing returns. Efficient collaboration also saves time and reduces the likelihood of errors, enabling a more effective approach to managing real estate investments.

2) Automating processes

Real estate investment software streamlines operations by automating routine tasks, such as data entry, calculations, and report generation. With pre-set rules and triggers, the software can automatically carry out actions, update data, or send notifications without manual intervention.

Excel requires manual effort for most tasks including data input, calculations, and analysis. This manual approach consumes more time and increases the likelihood of human errors, which can be detrimental especially when dealing with significant financial data.

Automating processes in real estate investment significantly reduces the time spent on mundane and repetitive tasks. This workflow automation ensures that necessary tasks are completed promptly, allowing investors and teams to focus on more strategic aspects of the investment process.

3) Project management

Dedicated real estate investment software serves as a powerful tool for project management and commercial real estate tracking. The centralized platform offers a consolidated view of all ongoing projects, allowing for easy organization and progress tracking.

The lack of a centralized platform on Excel means that information about different projects can become scattered across multiple spreadsheets. This makes it challenging to keep track of deadlines and progress.

The enhanced project management capabilities of real estate investment software offer substantial benefits for real estate investors. By having a real-time overview of all projects, investors can make timely and informed decisions.

4) Maintaining data integrity

Real estate investment software includes robust data validation and security features to maintain data integrity. These features work by validating the data at the point of entry, ensuring only accurate and consistent information is stored. The security protocols protect the data from unauthorized access or alterations, ensuring the data remains reliable.

Excel has limited data validation and security features in comparison to specialized real estate investment software. Excel files are more susceptible to unauthorized access or accidental alterations, making it a less reliable tool for maintaining data integrity.

Maintaining data integrity is foundational for making informed decisions in real estate investments. Accurate and consistent data ensures that the analysis and insights derived are reliable, ensuring effective decision-making.

5) Get data-driven insights

Real estate investment software provides analytics and reporting tools that offer valuable insights. With user-friendly dashboards, interpreting complex data becomes a straightforward task.

Excel lacks the intuitive analytics and reporting tools found in specialized real estate investment software. This results in the need to manually set up complex analyses and generate reports, which can be time-consuming and prone to errors. This can prevent gaining valuable insights from the data.

Gaining data-driven insights is fundamental for making informed decisions in real estate investment. By leveraging the analytics and reporting tools in real estate investment software, investors can uncover trends, identify opportunities, and manage risks.

FAQs about using Excel for real estate investment
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