The Future of the Property Management System

No piece of technology is more essential to the real estate industry than the property management system.

While many proptech tools innovate on the margins, the bulk of software dollars in real estate end up in the pockets of the companies running property management systems such as Yardi, AppFolio, Entrata, RealPage, and MRI. These companies have proven highly resistant to disruption over the years; MRI was founded in 1971, Yardi in 1984, and RealPage in 1998. AppFolio, the baby of the bunch, was launched in 2006—the same year Facebook expanded beyond higher education and Apple sold the first MacBook.

But there is reason to believe that change may be coming. Recent years have seen several new entrants raise significant capital to take on the incumbents. Customer expectations are also changing, with large real estate owners less tolerant of walled gardens in which “good enough” is sufficient.

Today’s letter will explore the future of the Property Management System, including:

• The current PMS landscape and existing operators, including interviews with executives at AppFolio and Entrata;
• Industry dynamics and moats;
• Challengers and new entrants, including interviews with several venture-backed founders taking on the space;
• A long (10+ year) view of the evolution of the PMS landscape in the context of other industries’ trajectories.