Development an ERP System for Real Estate Industry: A Complete Guide

ERP for real estate: the discovery phase

Have you decided to build custom ERP software for real estate but don’t have a plan on how to turn your idea into a real product? Where should you start? The answer is project discovery. This is an essential phase in the software development process that involves market research, competitor and target audience analysis, risk assessment, planning, and development time and cost estimation. With the discovery phase, you can validate your idea, clearly understand if a custom EPR will be beneficial for your company, and create a development plan.

The discovery phase requires stakeholders’ involvement. You should plan product development with the participation of all parties interested in the project’s success, such as the product owner, investors, QA experts, designers, software architects, and business analysts.

By involving a diverse range of stakeholders, you can tap into their specialized insights, industry experience, and domain expertise. This helps in uncovering potential risks, identifying opportunities, eliciting requirements, and making informed decisions during the discovery phase.

Now we’ll move to a step-by-step algorithm that includes all necessary aspects for creating a clear and comprehensive plan for further development.

Step 1. Start with market research

One of the questions you need to answer before developing a product is whether there is real demand for it. Even if you plan to build an ERP exclusively for your company, you need to know for sure that it’s the most effective way to solve your problems. And market research is key to getting meaningful insights and validating your idea.

Research the current state of the real estate market, the latest trends, and forecasts. The more information you get at this stage, the better. A rigorous analysis of this information will help you understand where the industry is moving and how your idea can help you keep up with expected changes.

Step 2. Develop a user persona

To ensure your ERP system has all necessary features and a convenient interface, you need to research the system’s users. Basically, you need to take into account all project stakeholders who will somehow interact with the system. Again, everything starts with research, when you analyze potential users of your ERP software and gather information about them.

If you create a system for your company, the users you should analyze are your workers. Thus, the important characteristics you need to understand are your employees’ occupations, technical backgrounds, and skills, along with system use cases. In this way, you’ll understand how complex the interface should be to ensure ease of use and what features and modules you should include.

Step 3. Analyze existing tools

The next important object of your research is existing ERPs for real estate. Assess their features, functionalities, pricing models, target audience, and customer reviews.

This step is vital, as you can find out during market research that there is an existing solution that fully meets your requirements and you don’t need to spend hundreds of thousands of dollars building your own ERP system. In this way, project discovery with an experienced team can save you a considerable amount of money and time.

In other cases, this analysis will help in determining the requirements necessary for competitiveness. It can open your vision of growth areas by identifying the weak points of systems already on the market and the unmet needs of their users that your product could cover. These insights will be useful if you plan to monetize your solution and offer it as a SaaS product to other real estate companies.

Step 4. Form a USP to stand out from the competition

Building an outstanding product isn’t enough. Use insights from the previous steps to form a unique selling proposition (USP). Emphasize what makes your ERP software unique and better than alternative solutions. This could include advanced features, ease of use, customization options, scalability, cost-effectiveness, integration capabilities, and exceptional customer support.

All in all, you need to understand what features your users want and need that are not available with existing systems. Then, you can find a way to provide them with necessary functionality within your software.

Step 5. Choose a business model and monetization strategy

Developing a custom real estate ERP solution is a great opportunity to get extra profit by selling your solution to other companies that have similar challenges to yours. If you’re considering this idea, you need to think about your monetization channels in advance. Here are two business models commonly used for ERP projects in the real estate industry:

1. Licensing model. You can offer software under a licensing model, where customers purchase licenses for an annual or pay-per-unit fee. Pricing can be based on factors such as the number of users, features included, or the size of the real estate portfolio being managed.

   Yardi Voyager, SAP HANA Cloud ERP, and Oracle Fusion ERP Cloud are successful examples of such a business model.

2. Software as a Service (SaaS) business model. This model is quite popular and is experiencing high demand because of SaaS industry trends towards increasing data security and integration capabilities, high demand for cloud computing, and ML adoption.

   In this model, you provide software as a subscription service, where customers pay a monthly fee to access and use the software. It often includes hosting, maintenance, and support services as part of the subscription.

   Examples of such solutions are MRI Software, Oracle NetSuite, and Workday.

In addition to the monetization methods directly provided by this business model, you can also earn profit through additional services:

1. Implementation and integration. You can get extra revenue for assistance with implementing ERP software, customizing it, and integrating it with the customer’s existing systems.
2. Add-on features. You can develop and sell add-on modules or integrations that enhance the functionality of your ERP software. These modules can address specific needs or provide additional features and capabilities, allowing customers to customize their ERP system further.
3. Revenue sharing. You may establish partnerships with real estate agencies, brokers, or other service providers. You can offer the ERP software as a platform for these partners to manage their operations and receive a share of the revenue or commission from transactions facilitated through the software.

Thoughtful planning of a monetization strategy for your real estate ERP system sets a solid foundation for your software’s success and enables you to maximize revenue generation while effectively meeting customer needs.

Step 6. Gather project requirements

The goal of this step is to form a software requirement specification (SRS). Use the information gathered during market, competitor, and audience research as a guide to form all technical requirements for the software, divided into functional and non-functional.

• Functional requirements refer to specific software functions and features that the ERP system should have. These requirements outline the software’s capabilities and behavior, such as creating and managing real estate listings, generating financial reports, tracking lease agreements, and facilitating property maintenance processes. We will have a closer look at this below.
• Non-functional requirements reflect how a system should perform these functions. Typically, non-functional ERP requirements are related to security, compliance, scalability, usability and UX, and integration.

The SRS provides a thorough understanding of the ERP system’s features, performance, and capabilities. It serves as a blueprint for the development team to build the software with a proper level of quality, meeting budget limitations and deadlines.

Step 7. Form a technology stack and methodologies

A well-thought-out tech stack and methodology that fits your project and meets its requirements is crucial. Here are some tips on how to build an ERP for real estate while avoiding the main obstacles on the way to success:

• Choose methodologies such as Agile development with the Scrum framework to optimize development processes and allow collaboration among all project stakeholders. This methodology involves dividing the development process into sprints. Within one sprint a team works on a piece of functionality, from design to deployment. Each sprint passes through planning, completion, analysis, and approval before the next sprint starts. This approach provides you with the opportunity to monitor and adjust the development process, quickly address software issues, and avoid delays in development.
• Set up a technology stack according to your SRS, budget, and timelines. There is no single stack that is best for all projects. However, there are technologies that provide better performance in working with a massive flow of requests and online streaming, and there are those that do not provide efficient and fast processing of large databases. That is why it’s critical to start from the requirements specification and consult with the team of development engineers when planning an ERP system.
• Prepare a proof of concept. This is a small-scale prototype of a product or function. The goal is to check if it’s possible to fulfill planned requirements with the selected technology stack. You can also use this method to determine which technologies work best for your project. In this way, a proof of concept helps you assess the project’s technical, practical, and commercial viability before committing significant resources to its full-scale development.

The discovery phase is complex and requires time, but the deliverables are crucial for the project’s success. If you don’t know how to conduct project discovery on your own, feel free to reach out to specialists for software development consulting. An experienced discovery team can advise you on estimates, MVP building, and function prioritization. They can also guide you on technical nuances that you may not be aware of.

By consulting with experts, you can form a comprehensive view of the project, predict and avoid potential risks, and save time and money on solving problems that could have been avoided using experience from other projects.

MVP functionality

ERPs are complicated systems used by businesses in different real estate business niches. That’s why their functionality consists of modules. Each module is a set of features related to different business processes in real estate companies.

A custom ERP for real estate can include many modules depending on your business needs. But is it necessary to build a product with a full range of modules from the start? Doing so is a risky decision. Even though you’ve conducted thorough research and planned everything during the discovery phase, you risk wasting resources on building a full-fledged system and not getting the result you’re looking for.

So, what should you do to minimize risks and development costs? The answer is to build a minimum viable product (MVP). This is a version of your product that contains only the core module needed to complete the main task. It takes much less time and resources to build an MVP but allows you to see if the ERP system meets your expectations. Then, if you see that the system with one module works as expected, you can upgrade your product and add more modules.

Let’s take a look at what modules you can implement in your MVP and what features you should take into account.

ERP modules

Here are modules or functional areas typically found in real estate ERP systems:

1. Property management. This module handles tasks related to real estate property leasing, tenant management, online payments (rent collection and others), maintenance requests, vacancy tracking, lease administration, and financial reporting. Having this module in your ERP system eliminates the need for custom property management software while improving the data flow among other modules.
2. Lease management. This module has some overlapping functions with the previous but focuses mostly on lease-related processes and activity management. It contains functions allowing businesses to manage contracts and handle lease negotiations, rent escalations, lease renewals, rent roll management, and lease compliance.
3. Financial management. This module focuses on accounting and financial operations, including general ledger, accounts payable and receivable, budgeting, invoicing, automated reporting, tax management, and cash flow management.
4. Sales and marketing. This module supports activities related to sales and marketing, such as lead management, customer relationship management (CRM), property listing management, marketing campaigns, inquiry tracking, and sales analytics.
5. Asset management. This module deals with the management of real estate assets, including asset tracking, maintenance scheduling, capital expenditures, depreciation, asset valuation, and performance analysis.
6. Facilities management. This module may seem similar to the previous. While they both are involved in managing real estate assets, the asset management module primarily focuses on overall asset management and performance throughout the lifecycle, whereas the facilities management module specifically addresses the maintenance, operations, and optimization of facilities within the real estate portfolio. The facilities management module covers work order management, preventive maintenance, asset tracking, space management, energy management, and facility usage analytics.
7. Construction and project management. This module assists in managing real estate construction businesses, including project planning, scheduling, budgeting, subcontractor management, materials procurement, progress tracking, and project accounting.
8. Reporting and analytics. This module provides tools and capabilities for generating various reports, dashboards, and analytics to gain insights into key performance indicators (KPIs), financial metrics, occupancy rates, sales performance, and other important data.

It’s pointless to work on multiple components to build an MVP. It’s better to focus on essential ones and extend functionality gradually after the market launch. You can pick modules that are must-haves specifically for your business and combine them. If you choose SaaS application development, you can make a set of modules for your customers and let them choose which they want to use and pay for, making your system more flexible and convenient for customers.

ERP features

Your product needs certain functionality whether it is real estate brokerage software, construction ERP software, or software for some other real estate niche. When choosing among the modules discussed above, make sure you cover the following:

1. Admin dashboard. This feature allows administrators or ERP system owners to manage and control the software, including managing users, accessing permissions, configuring settings, and handling overall system administration.
2. User profile. Users should have the ability to create and manage their profiles, which may include personal information, preferences, and settings relevant to their use of the software.
3. Location-based features. Real estate software often relies on location-based data such as property listings, maps, nearby amenities, etc. Including location-based features enables users to search for, filter, and visualize properties based on their geographical attributes.
4. Reporting and data visualization. Providing robust reporting and data visualization capabilities allows users to generate insights, track performance metrics, and present data in a visually appealing and informative manner.
5. Data privacy. Implementing proper data privacy measures including data encryption, user consent mechanisms, and compliance with relevant data protection requirements is vital to ensure the security and privacy of user information.
6. Payment functionality. Ensure secure and reliable payment processing and support multiple payment methods to accommodate diverse user preferences. You can also implement automated payment reminders and notifications and provide detailed transaction history and receipts for transparency and record-keeping.
7. Third-party integrations. Integrate your real estate software with external systems or services, such as property listing websites, payment gateways, customer relationship management (CRM) tools, or accounting software.
8. Integration and data exchange. This feature enables integration with external systems and data sources, allowing for seamless data exchange between the ERP system and other applications or platforms used in the real estate ecosystem, such as CRM systems, property listing portals, and financial institutions.

By considering our tips and aligning your core MVP functions, you can create competitive real estate ERP solutions that meet market demands and drive business growth.

ERP engineering team: cooperation model and composition

Once you’ve decided on the scope of work and what exactly you want to build, it’s time to choose who will build your custom ERP system. You can choose a cooperation model and set up your real estate ERP development team.

The regular software development team structure includes the following roles:

• Project manager: Responsible for overall project coordination, planning, and management
• Developers: Responsible for writing code and implementing software based on specifications provided
• Quality assurance (QA) engineer: Tests the software to identify and fix any bugs or issues and ensures software meets the desired quality standards and performs as expected
• UI/UX designer: Designs the software’s user interface (UI) and user experience (UX), focusing on usability, visual appeal, and intuitive interactions

The team’s size and composition may vary depending on the scope of work and the project’s complexity. You can determine the exact team composition only on the basis of requirements formed during the discovery phase.

Now, let’s glance at cooperation options available for creating ERP software for real estate development.

In-house development

In-house development refers to hiring and maintaining a dedicated team of developers and other professionals within your company. It has the following advantages:

1. This type of cooperation allows you complete control over the development process and facilitates continuous communication.
2. You will not face problems related to time zone differences or a language barrier.

However, this type of cooperation has some significant disadvantages:

1. Choosing an in-house team involves your participation in all organizational processes, such as team organization, hiring, and office maintenance, which will take a lot of time and effort.
2. The cost of development is higher compared to outsourcing. Working with your team will require spending on staff training, office rent, equipment purchases, and more. Plus, it’s not that easy to stop cooperation with an in-house developer if the project scope changes and you no longer need a development team.

IT staff augmentation

IT staff augmentation involves temporarily extending an existing in-house IT team with external resources. It’s a winning option for real estate ERP development if your team lacks resources or specific skills or expertise required for the project or if you need short-term or specialized support for a specific milestone or module.

Software development outsourcing

Outsourcing an ERP software development project to a software development company is a popular cooperation model that has the following advantages:

1. You don’t have to deal with hiring and other organizational processes, as they are all handled on the vendor’s side. You can concentrate on your core business activities and strategic initiatives instead.
2. You’ll have access to an extensive talent pool of skilled professionals from around the world. Why limit yourself to locally available specialists? With outsourcing, you can choose from a vast selection and will have no problem finding candidates.
3. Outsourcing product development to an experienced team can result in significant cost savings. Your project will be managed and executed by well-versed specialists with expertise working on a range of products. At the same time, you won’t need to spend extra on maintaining an office or other expenses involved in hiring an in-house team.

These advantages make outsourcing popular, especially under the current market conditions of economic recession and remote work. By choosing a reliable software development company, you can save money, stay up to date on progress and changes while not investing all your time in the project, and get a high-quality product at the end. When looking for a technical partner, pay attention to the following factors:

1. Experience and portfolio. Checking portfolios, completed projects, and previous clients’ reviews is a must. In addition, pay attention to how the team deals with estimating project costs and timelines and planning for the development process. Professional agencies usually offer discovery services to provide you with a basic understanding of the development process. In this way, you get the opportunity to assess how experienced the team actually is.
2. Communication methods. Qualified teams hold regular meetings, use project management tools, and maintain open communication channels. This ensures effective collaboration, minimizes the risk of miscommunication, and allows you, as the owner, to fully control the development process and stay informed about all changes.
3. Quality management approaches. Check which software quality assurance approaches your potential partners use and see whether they are familiar with (and have experience in) the software testing lifecycle, continuous integration, and continuous delivery (CI/CD).
4. Reasonable pricing and transparent cooperation. These are signs of a trustworthy team allowing for clear distribution of responsibility, ensuring compliance with deadlines and budgets.

Take into account all these aspects to get the maximum benefit when choosing an offshore software development model and minimize potential risks.

ERP development: time and cost

The exact estimate for implementing your idea can differ significantly. You can calculate the exact cost only after considering project requirements. On average, MVP development for ERP real estate solutions takes around 2,000 hours and may cost $100,000+.

Overall, the cost and timeline for real estate software development depend on the following factors:

• Project scale. Software that includes a wide range of modules and functionalities designed to handle a substantial volume of data and support complex processes will require massive funds and much more time to complete compared to simpler solutions.
• Technologies. Solutions like the blockchain, big data, and AI models for real estate can substantially impact your development budget.
• Customization and integration. The level of customization and integration required with existing systems or third-party applications can impact the development time and cost.
• Development team. The type of cooperation and team scale can greatly influence development spending.

Here are a few tips on how to reduce software development costs without sacrificing quality:

• Outsourcing. We’ve already mentioned that offshoring development allows you to hire a more experienced team for the same rates as if you hired an in-house team while allowing you to avoid extra spending on maintaining an office.
• Agile adoption and quality management. By choosing iterative and collaborative methodologies, implementing thorough planning, mitigating risks, and adhering to STLC and CI/CD practices, you can optimize budget spending by saving resources and development time on fixing errors, as the Agile approach allows you to effectively identify and address issues through all development stages.
• Leverage existing technologies and frameworks. Use existing software frameworks, open-source solutions, and third-party APIs to accelerate development. By leveraging existing technologies, you can reduce development time and costs associated with building everything from scratch.
• Minimize scope creep. Define the scope of your ERP MVP project upfront and resist the temptation of constantly adding new features. Scope creep can significantly impact both development time and costs. Stay focused on the core functionalities that deliver value and save additional enhancements for future iterations.

By considering and carefully managing these factors, you can optimize your cost and timeline while delivering a high-quality solution for your real estate business.

In conclusion

ERP systems are widely adopted among real estate companies, as they allow you to systematize and adjust business processes, data storage, and migration in one system.

Although the market is full of ready-made solutions, only custom ERP software for real estate gives almost unlimited prospects regarding customization, integration, and expansion. Creating your own ERP is beneficial both for use in your own real estate business and as a source of income when choosing the SaaS business model.

To build top-notch ERP software, conduct a thorough discovery process involving stakeholders, prioritize features, choose favorable terms of collaboration with the team, and establish effective cooperation.

Feel free to consult with software development specialists to avoid common problems and pitfalls.

Considering this information and these tips, you can benefit from an enterprise resource planning product, optimize real estate activities, and stay ahead of competitors.

Sources

• 2023 Commercial real estate outlook — Deloitte Insights. Research on current concerns, challenges, and trends in the real estate industry and a forecast of future changes in business strategies.
• Emerging Trends in Real Estate 2023. The outlook of the real estate market in 2023, current issues, and investment and development trends based on responses of workers from different real estate segments.
• Magic Quadrant for Cloud ERP for Service-Centric Enterprises. Evaluation of cloud ERP solutions.
• 2022-2023 Top 10 Issues Affecting Real Estate. Insights into emerging issues expected to have a significant impact on the real estate industry.
• Real Estate in a Digital Age 2019 Report. Report on the use of technology by real estate companies and challenges related to the digitalization era.
• Best ERP Software for Real Estate. Analysis of the best third-party ERP software for small and medium-sized real estate companies.
• The Role of Enterprise Resource Planning in Improving an Organization’s Intellectual Capital. Research on the impact of ERP implementation on users’ work performance.
• ERP Usage and Its Impact on Firm Performance. Research on the connection between ERP implementation and firm performance in small and midsized Swedish companies.