In the post-financial crisis world of real estate investment management, there is perhaps nothing more important to the investor than the accuracy of an investment’s financial information and the speed with which it is provided.
For real estate investment firms, reducing the risk of data errors and eliminating redundant or duplicated efforts can literally make or break a deal with a potential investor. Whether you’re negotiating with a group of limited partners, high net worth individuals, or reporting to real estate investment consultants, your investors want reports on various accounting, financial, quantitative, and qualitative performance of their investments, and they want it regularly. And, considering that each investor’s ownership stake likely changes from fund to fund—or even as the negotiations advance within a particular fund—your reporting requirements are far from uniform, making your work—and the work of your staff—all the more complex and arduous.
There is a silver lining, though. Regardless of differences in various investors’ ownership and fees, the real-time source data to calculate the performance metric remains the same. However, real estate investment managers who use out-of-the-box general ledger software (QuickBooks, Excel, etc.) are not necessarily dealing with real-time information. Moreover, they are likely duplicating their efforts with each disparate report they create, and therefore also wildly increasing their risk of error. Think about it: if you have to pull data from different versions of the “same” spreadsheets and documents—which reflect fluctuating financial information—you cannot be 100% confident that the particular version of a spreadsheet you’re using is the most up-to-date.
At best, informational errors can lead to inaccurate budgeting and forecasting. At worst, it can damage your firm’s credibility and reputation. In other words, the repercussions of a seemingly innocuous clerical error in a singular report can reverberate long after the lifespan of the deal.
As a savvy, twenty-first century real estate investment portfolio manager, such a business-critical process that relies on Excel and generic general ledger software is far too cumbersome, takes far too much time, and is far too fraught with an inherent risk of error.
The clear solution for a real estate investment manager is a fully integrated solution that meets the reporting needs for each of your stakeholders: from the property managers to the limited partner investor, an integrated software solution can provide your entire team with the visibility, efficiency, transparency, accuracy, and real-time access that can make you an industry leader.