Real estate remains a strong investment vehicle, which makes operating a real estate investing firm a solid business decision.
That’s not without challenges, however, including managing multiple funds, ensuring data accuracy, and managing everything that goes along with the real estate industry — maintaining financial records, complying with tax laws and paying property taxes, managing lease agreements, and reporting real estate income.
Fortunately, the right software can help you face these challenges head-on.
The right software can help you manage much more than real estate accounting basics. It can improve transparency, accountability and compliance, enabling better decision-making and improving your firm's financial health. This helps you maintain a trustworthy reputation among investors and prospects. Here's what you can accomplish with the right real estate accounting system.
Investment is a fast-paced game. Effective financial management relies heavily on having real-time insight into your financial data. This isn’t possible if your software requires excessive manual data entry and logging in and out of multiple databases to compile accurate reports.
If a desirable commercial property goes on the market, you need to find out now whether your real estate accountants are in a position to make the acquisition before the real estate agents sell the property to someone else.
That’s the risk you run when using entry-level, single-entity software for your real estate accounting.
Gravity Software houses all of your firm’s financial information in a single database. This gives you real-time financial visibility into individual funds and your real estate investment firm or family office as a whole.
Thanks to its seamless integration with Microsoft Power BI, Gravity drives that visibility home with data visualizations that can be incorporated into customizable dashboards. This gives stakeholders up-to-the-moment, individualized insights that can be understood at a glance. Keep tabs on the firm’s overall performance, or compare funds or properties side-by-side for a literal picture of when it’s time to reassess an investment vehicle or reallocate capital in its direction.
InDevCo had a problem. Their entry-level accounting solution was forcing their team to log into and out of more than a dozen different databases every time they wanted to enter even one new piece of financial information.
“I was logging in and out of programs, wasting valuable time on the program alone,” said the real estate accountant and company’s controller, Rette Rankin. “It came to the point where I almost hired another accountant to help with all of the financials.”
Instead, they invested in Gravity Software. Gravity’s multi-entity accounting capabilities eliminated that problem, making it easy for the real estate consulting firm to manage a portfolio of more than 90 entities in one data. Instead of copying and pasting the same number 10, 20 or 60 times and then going back to balance the transaction, intercompany transactions balance automatically.
This translates to more efficiency and fewer errors. And that’s paramount in an industry where failure to supply accurate data to investors and regulators can result not just in reputational damage but legal consequences.
“Gravity streamlined our workflow process and consolidated all of our companies into one user-friendly database,” Rankin said.
Shareholders aren’t just going to give you their money and cross their fingers, hoping for the best. Accurate financial reporting is crucial for managing real estate transactions effectively. They’re going to want to see exactly where their money is, what you’re doing with it, and how their investment is faring. Those who manage the investments are going to want that information, too, and they don’t have hours on end to spend piecing it all together when their focus should be on analyzing and strategizing.
Financial reporting with legacy accounting software requires the same tedious copying and pasting of numbers as recording transactions does – except, instead of copying and pasting just one transaction, you need to do it for all of the numbers from a given time period, for all of your funds.
InDevCo knew this pain all too well before switching to Gravity and watching their operations transform.
With Gravity’s multi-entity accounting capabilities comes the ability to create consolidated reports – without the need to slog through a slew of logins/logouts and endless copying and pasting. Now, InDevCo team members can pull reports anytime they want, and they can even compare and analyze multiple properties at once. This means shareholders can also be afforded a higher level of transparency.
Consulting firm Realty Capital Analytics recommends providing quarterly or semi-annual reports as a best practice for investor relations. But accurate, detailed financial statements aren’t just for keeping investors and managers happy. They’re required by the SEC in some cases, such as if your fund is soliciting investments from non-accredited investors through online platforms. There are also fund types in which a report must be furnished annually to the SEC.
Real estate accounting requires ensuring data security and handling sensitive financial information effectively. This includes investment decisions, company data and, most importantly, clients’ financial information. If your fund requires accredited investors, you might even have copies of clients’ tax returns and other sensitive documents stored in your system.
Protecting all of that information is imperative, not just from a financial perspective but from a reputational one.
The right real estate accounting solution employs robust security measures so clients can rest assured that you’re doing everything you can to keep their data, and their money, safe. Leveraging the Microsoft ecosystem, Gravity Software features:
Regulatory compliance in the real estate business accounting sector can be a complex undertaking, but it’s obviously a necessary one. The right real estate accounting software can mitigate some of the challenges associated with compliance.
With Gravity Software, for example, even though information for all funds is housed within a single database, each fund can still be treated as an independent entity. This means you can ensure different fund types comply with the regulations relevant to them, while still consolidating each fund’s data into a single financial overview.
Here, too, Gravity’s audit trails are beneficial, as they provide documentation of your firm’s movements in the case of scrutiny by a regulatory body. Gravity Software integrates seamlessly with Microsoft Dynamics 365 CRM so you can keep careful track of your communications with each investor. Automated workflows also contribute to transparency in investor communications. Through Gravity’s integration with Microsoft Power Automate, you can create mechanisms for seeking investor approval, as applicable, on decisions like acquisitions and liquidations.
We also understand the importance of property management and will be introducing a new solution soon for real estate investors and others. Stayed tuned for updates — and schedule a demo today to see how our real estate management software can transform your operations.
Gravity Software
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