Excel Spreadsheets vs. QuickBooks vs. Property Management Software: Pros and Cons
Efficient accounting and organization are paramount to the success of any rental investing business.
At this point, however, you may have noticed a problem: traditional methods are... limited.
Not to mention, whether it's a tried-and-true method or new and improved one, you have several different options.
Landlords rely on various tools, such as Excel spreadsheets, QuickBooks, and property management software to manage their properties. Which one works best for you all depends on a few things– which is exactly what we'll cover here.
This guide will discuss each of these options in-depth, providing an explanation of what they are and their pros and cons.
To begin, let's go over one of the more traditional accounting tools: the Excel spreadsheet.
Microsoft Excel, launched in 1985, is a widely-used spreadsheet software that allows users to organize, format, and calculate data using formulas and functions.
Over the years, Excel has evolved to include advanced features, making it a popular choice for various industries, including property management.
In the property management business, Excel spreadsheets are often used for tasks such as:
- Tracking rental income
- Managing expenses
- Recording security deposits
- Monitoring property maintenance
- Creating financial reports, such as income statements and balance sheets
So, now that we know what it is and some of its common uses, let's get into the pros and cons of using excel spreadsheets.
Pros of Excel Spreadsheets
In this section, we'll discuss some of the pros of using excel spreadsheets for your property management business.
Excel offers a high degree of customizability, allowing property managers to create personalized spreadsheet templates to meet their specific needs.
With its wide range of functions and formulas, Excel can be tailored to suit various property management tasks.
As a part of the Microsoft Office suite, Excel is often included in many software packages, making it a cost-effective solution for small businesses and property management companies.
Wide Range of Functions & Formulas
Excel features a vast array of functions and formulas, enabling property managers to perform complex calculations, analyze historical data further, and identify financial trends.
Excel spreadsheets are compatible with various platforms and devices, making it easy for property managers to access and share their data across different systems.
Cons of Excel Spreadsheets
Now that we know about some of the pros of Excel Spreadsheets, lets get into the cons of using this tool.
Steeper Learning Curve
While Excel offers extensive functionality, it may present a steeper learning curve for those unfamiliar with its features and formulas, potentially slowing down their property management tasks.
Limited Collaboration Features
Excel has limited real-time collaboration features compared to modern accounting software programs, making it challenging for multiple property managers or team members to work on the same spreadsheet simultaneously.
Risk of Manual Errors
Manual financial data entry in Excel can lead to errors, potentially causing inaccuracies in financial records and reports.
Time-consuming for Complex Tasks
As property management companies grow and manage multiple properties, using Excel spreadsheets for complex tasks can become time-consuming and challenging to maintain.
When To Use Excel Spreadsheets
- Excel spreadsheets are best suited for property managers who:
- Manage a small number of rental properties
- Have prior experience with Excel and its features
- Require a cost-effective solution for basic accounting and property management tasks
- Do not need advanced collaboration or automation features offered by specialized property management software or accounting tools
After learning about Excel Spreadsheets, now let's learn about one of the other popular options, QuickBooks.
QuickBooks, developed by Intuit and first released in 1998, is a leading accounting software designed primarily for small businesses and property management companies.
It offers a comprehensive suite of financial management tools, including invoicing, expense tracking, and reporting capabilities.
In property management, QuickBooks is often used for:
- Tracking rent payments and accounts receivable
- Managing expenses and accounts payable
- Reconciling bank accounts
- Generating financial reports, such as income statements and balance sheets
- Facilitating online payments for rent and other property-related fees
So, now that we know what it is and some of its common uses, let's get into the pros and cons of using excel spreadsheets.
Pros of QuickBooks
Some of the pros of using QuickBooks include:
Comprehensive Financial Management
QuickBooks provides an all-in-one solution for managing a property management company's finances.
Its wide range of accounting features allows property managers to efficiently handle rental income, expenses, and financial records.
Integration with Other Software
QuickBooks can integrate with various property management software and tools, streamlining processes and reducing the need for manual data entry.
QuickBooks is designed to grow with your property management business.
It offers various editions, such as QuickBooks Desktop, QuickBooks Online, and QuickBooks Enterprise, catering to businesses of different sizes and needs.
Reporting and Analysis Tools
QuickBooks provides robust reporting and analysis tools, enabling property managers to monitor their financial performance, identify trends, and make informed decisions.
Cons of QuickBooks
Some of the cons of using QuickBooks include:
Limited Property-specific Features
While QuickBooks is a powerful accounting solution, it lacks some property-specific features found in specialized property management software, such as tenant portals, maintenance request management, and even owner portal portals.
Higher Cost Compared to Excel Spreadsheets
QuickBooks typically comes with a higher cost compared to Excel spreadsheets, especially for subscription-based versions like QuickBooks Online.
Can Be Complex for Non-accountants
QuickBooks, with its extensive accounting features, can be complex for non-accountants, requiring a learning curve for property managers without accounting backgrounds.
When To Use QuickBooks
QuickBooks is best suited for property managers who:
- Manage multiple properties or a growing property management business
- Require comprehensive financial management and reporting capabilities
- Seek integration with other property management tools and software
- Are willing to invest in a more sophisticated accounting solution compared to Excel spreadsheets
Finally, let's get into the final option that we will review, property management software.
Property Management Software
Property management software is a specialized solution designed to simplify and automate tasks related to managing rental properties.
There are various types of property management software, ranging from standalone applications to comprehensive cloud-based platforms.
Typical features and functionalities of property management software include:
- Tenant and lease management
- Maintenance requests and work order management
- Rent collection and online payments
- Accounting and financial reporting
- Communication and collaboration tools, such as owner and tenant portals
- Marketing and vacancy management
Obviously, property management software may be better suited for property managers.
However, let's get into the specific pros and cons of this tool.
Pros of Property Management Software
Some of the pros of property management software include:
Specialized Tools for Property Management Tasks
Property management software offers specialized tools tailored to the needs of property managers, streamlining tasks like lease management, rent collection, and maintenance requests.
Automation of Repetitive Tasks
These solutions automate repetitive tasks, such as sending rent reminders, tracking lease renewals, and generating financial reports, saving property managers time and reducing manual errors.
Improved Communication and Collaboration
Property management software often includes communication and collaboration tools, such as tenant and property owner portals, facilitating real-time updates and transparency between property managers, tenants, and owners.
Customizable Reporting and Analytics
Modern property management software provides customizable reporting and analytics, allowing property managers to track financial trends, monitor property performance, and make data-driven decisions.
Cons of Property Management Software
Now, some of the cons of using property management software include:
Can Be Expensive
Some property management software can be expensive, particularly for smaller property management companies or businesses with a limited budget.
Fortunately, not every software charges an arm-and-a-leg, and with some you can get all or most of the features you'd get from a large enterprise software while saving a ton.
Switching between different property management software platforms can be challenging due to vendor lock-in and compatibility issues, potentially resulting in a loss of data or functionality.
Fortunately, some property management software have integration with QuickBooks Online, though the list of tools with that integration is extremely limited (DoorLoop being one of only a handful).
Learning Curve for Some Platforms
Some property management software platforms have a learning curve, requiring property managers to invest time and resources in training and onboarding.
The older software, the more difficult and sluggish it becomes, so it's important to find a newer software for the optimal experience.
When To Use Property Management Software
Property management software is best suited for property managers who:
- Manage a growing portfolio of rental properties
- Require specialized tools and automation for efficient property management
- Seek improved communication and collaboration with tenants and owners
- Want customizable reporting and analytics capabilities for better decision-making
So, now that we know about the pros and cons of each one, let's discuss how they compare to each other when put head-to-head.
QuickBooks vs Excel Spreadsheet vs Property Management Software
To begin, with the comparison, it's essential to first compare the features that each tool provides in order to know which one has the features that your business needs.
In the table below, we've graded each one of our options on different features and characteristics to help you choose which one is the best for you.
Excel Spreadsheets offer basic accounting and manual data management, while QuickBooks provides comprehensive financial management and integrations with other software.
Property Management Software, on the other hand, delivers specialized tools for managing rental properties, including tenant and maintenance and best property management software.
So, now that we know about some of the main features of these different tools, let's discuss some of the important factors that should be considered
Factors to Consider When Choosing the Right Tool
Before choosing the best tool for your property management needs, you should consider some of the following important factors.
Size & Complexity of the Property Portfolio
Larger property portfolios with more complex operations may benefit from the specialized features and automation provided by property management software or QuickBooks, while smaller property management companies or those with simpler needs may find Excel Spreadsheets sufficient.
Excel Spreadsheets are a cost-effective option for those with budget constraints, while QuickBooks and property management software can be more expensive, particularly for advanced features and additional user licenses.
Team Expertise & Preferences
Consider your team's familiarity and comfort with each tool. If your team is already proficient in Excel, it may be easier to continue using spreadsheets.
However, if your team has accounting expertise or prefers the features of a property management software, it may be worth investing in a more specialized solution.
Integration with Existing Systems
Evaluate how each tool integrates with your existing systems, such as accounting software, payment solutions, or maintenance management systems.
Seamless integration can save time, reduce manual data entry, and minimize errors.
Finally, after choosing your preferred tool, let's talk about how to maximize the benefits of the tool that you have chosen.
Tips for Maximizing the Benefits of Your Chosen Tool
No matter which solution you choose for your property management needs – Excel Spreadsheets, QuickBooks, or Property Management Software – you can maximize its benefits by following these key tips.
Training and Skill Development
To make the most of your chosen tool, it's essential to invest in training and skill development for yourself and your team. By becoming proficient in your selected platform, or bookkeeping software, you can ensure that your property management company operates more efficiently and effectively.
For Microsoft Excel, consider attending workshops, webinars, or online courses to enhance your spreadsheet skills and learn advanced features.
QuickBooks users should explore resources provided by Intuit, such as tutorials and certification programs, to become adept at using the accounting software.
For Property Management Software, engage in training sessions offered by the software vendor, and take advantage of onboarding resources and ongoing support.
Leveraging Integrations and Add-ons
Extend the functionality of your chosen solution by integrating it with other software programs and leveraging available add-ons. Integrations can help streamline your property management processes and save time by reducing manual data entry.
Excel users can look for plugins and templates designed to enhance rental property accounting and management tasks.
QuickBooks offers a vast ecosystem of third-party applications, such as online payment gateways for rent collection and property maintenance request tracking tools.
Property Management Software typically comes with built-in integrations for various third-party services, including property listing platforms, payment processors, and communication tools.
Regularly Reviewing and Updating Processes
Stay adaptable by regularly reviewing and updating your property management processes. As your business grows and evolves, reassess the effectiveness of your chosen tool and adjust your workflows accordingly.
Monitor the efficiency of your Excel spreadsheets and look for opportunities to simplify formulas or implement new features.
In QuickBooks, reevaluate your chart of accounts and financial reporting needs, making necessary adjustments to better reflect the cash flow of your property management business.
Property Management Software users should stay informed about software updates and new features that could further enhance their operations.
Seeking Feedback from Team Members and Stakeholders
Actively seek feedback from team members and stakeholders, such as property owners and tenants, to ensure your chosen solution meets their needs and expectations. This feedback can be invaluable in identifying areas for improvement and guiding future enhancements.
Regularly solicit input from property managers and other team members to uncover any challenges or frustrations with your chosen tool.
Request feedback from property and small business owners on the quality and frequency of financial reports and communication.
Engage with tenants to better understand their experience using tenant portals, online rent payment options, and maintenance request systems.
By following these tips, you can maximize the benefits of your chosen property management tool – be it Excel Spreadsheets, QuickBooks, or Property Management Software – and drive your property management business to success.
In conclusion, as a property manager, choosing the right tool for managing your properties is a crucial decision that can significantly impact your business's success.
Whether you opt for Excel Spreadsheets, QuickBooks, or Property Management Software, each solution has its pros and cons that must be carefully weighed against your specific needs, budget, and preferences.
We're confident that, armed with this knowledge, you can make an informed decision and propel your property management company to new heights.