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Landlord or Operator, who should buy the Real Estate Management Software?

In a recent conversation with a prospective customer, we spoke with both the landlord and operator as they both wanted to understand the capabilities of our software platform. They mutually agreed to go ahead with our residential solution (TheHouseMonk) but were discussing internally who should be the buyer of the software.

I found this to be a fascinating discussion and spoke to the landlord to understand why this was happening as most of our other customers aren’t particularly passionate about who is the ‘buyer’ according to the contract.

In general, the landlord felt strongly that he should be the person buying the software licenses and would later allow the Operator to use the licenses on his behalf.

I am paraphrasing his reasons below:

As an institutional landlord, he felt control over underlying data becomes critical at every step – Be it for revenue tracking, expense management, occupancy analysis or space analytics/insights. If the operator has control over the data, it becomes more difficult for landlords to stay on top of their business.

Another point he mentioned on this thread: At the time of selling the asset to a new buyer, it becomes so much easier to perform Due Diligence if the Landlord has complete access to the software and its data, as they can move lightning quick.

If the operator owns the software licenses, it becomes a friction point to replace the operator at a later date. He felt that data migration from the software of the incumbent operator to new invariably leads to data loss, and poor tenant experience, which would anyway affect the Revenues/Net Operating Income, and he would prefer to avoid that situation.

Although most softwares have clear audit logs and make it harder to manipulate underlying data, he felt he would not be able to truly trust the SLAs reported to him by the Operator if he doesn’t own the software licenses. Although the intentions of the senior management might be in the right place, the end team members who might use it could always change some data especially around SLAs on the facilities management portion of the business.

He was clear that it had not happened to him yet (or had never caught an operator doing it) and this was more of a safeguard measure more than anything else.

The final point was the most obvious according to him – that most operators he was working with anyway include the software cost as part of the operating expenditure and bill it back to him along with other costs anyway! So there was no cost advantage for him to allow the operator to buy the software.

There were lots of takeaways for me from this conversation –

The biggest being Landlords were starting to take data and software a lot more seriously than before!

As a company, we serve both Landlords and Operators, so I can easily write a rebuttal for the above points from an Operators Point of View. I don’t believe there is a correct answer to who should ‘own’ the software between Landlords and Operators – It can change based on too many variables, but I was glad the industry is starting to think about the nuances around this.

Are you a landlord or an operator and do you have a perspective on this? Feel free to add your views in the comments below