4 Reasons Investors Need to Say Goodbye to Their Excel Spreadsheets

4 Reasons Investors Need to Say Goodbye to Their Excel Spreadsheets

Microsoft Excel spreadsheets became the gold standard of the business world in the years after its launch.

The automated formulas cut computing time, it created graphics from data, and the digitized workbooks reduced clutter. Excel’s broad range of applications meant it was the workhorse of the modern office. The spreadsheet became an invaluable work tool that Mac users have a similar tool with Numbers and Google offers Google Sheets. For real estate investors, these spreadsheets were the go-to software to handle bookkeeping, budgeting, projections, estimations, and more.

According to Argus Software, 78% of investors still use spreadsheets for investment management. Alas, time moves on. Now technological advancement is making the spreadsheet obsolete. Real estate investors, Excel is a putting you at a disadvantage both with missed opportunities and in time involved managing the spreadsheet. Why do you need to retire your spreadsheets?

1) Excel Spreadsheets are prone to error.

Manual data entry always leaves open the door for error. The smallest change to a formula can cause a ripple effect across dozens of linked spreadsheets. JP Morgan famously lost $6 billion when a cut-and-paste error caused their value-at-risk model to miscalculate. An “honest mistake” caused a $1.13 billion error in a Fannie Mae spreadsheet back in 2003, and a forgotten minus sign caused Fidelity’s Magellan fund to report a $1.3 billion gain instead of a loss. From the 2012 London Olympics to a debunked Harvard economics paper, a Google search reveals the numerous victims of spreadsheet errors.

Ensuring accuracy requires auditing large quantities of data. Reviewing data takes time and by its nature, isn’t fool-proof. Time is money and mistakes are money. In real estate investing, time is of the essence. Excel spreadsheets can’t sync automatically, so they are more liable to contain out-of-date information. That’s not something investors want when making decisions.

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2) Excel is Not Escalable

The software can calculate financial equations and make projections, but programming spreadsheets to do just that is not easy. Even if the right template exists, setting up a spreadsheet’s formulas makes some Excel users feel they need to learn a new language. Obviously, manual data entry is not an efficient practice. Sometimes, investors are duplicating data in numerous spreadsheets. The result? Besides wasted time, some data points will get missed along the way.

Finally, keeping Excel documents organized is a chore. Having multiple stakeholders editing one sheet leads to several versions of the same document. Some people end up doing the same work! Additionally, investors are left wondering which version is most recent. Investors often have multiple sheets working at once, so finding the data you need requires hunting through many spreadsheets and tabs.

3) Excel Is Difficult to Automate

Spreadsheets like Excel or Sheets are not equipped to handle real-time data changes. This forces users to look up the real-time data and manually input changes. It must be continually updated so staff ends up doing the bare minimum. They tire of constantly visiting the spreadsheet just to change the numbers.

4) Excel Is Not User Friendly

Even if you are 100% fluent in Excel and Visual Basics, it is hard to understand someone else’s spreadsheet. Have you ever picked up an Excel sheet that someone else created? Have you ever had to figure out someone else’s large spreadsheet with data crossing multiple tabs or linking multiple spreadsheets? If you have had the pleasure to do this, you know first hand it is not impossible, but the difficulty grows with the size and complexity of the spreadsheet.

What Real Estate Investors Need Instead of Spreadsheets

Wouldn’t it be nice to open your Excel document or Google Sheets and have all the data you need at your fingertips, easily searchable, and no specialized knowledge needed to work? That’s what modern technology does for real estate investors. Today’s investment management platforms have several clear advantages over Excel spreadsheets.

1) Cloud-Computing Gives Investors Data Access Anywhere

What’s so special about the cloud? Well, it has several key benefits for real estate investors: efficiency, accuracy, and access. Cloud computing automates data entry to make uploading your company’s data more efficient. No more manual entry is necessary. Since the cloud handles large sums of data, it can crunch the numbers to find trends Excel might miss.

Plus, cloud computing means accessing data from any location on any device. There’s no logging into Dropbox to search for the latest spreadsheet, or exchanging USB drives, or waiting for an emailed document. Stop juggling multiple versions of the same document, wondering which one is most recent and correct. Cloud computing keeps a revision history but always presents the most recent data first. Additionally, with a cloud-based solution, you can run an investment projection from your smartphone while sitting in the airport.

2) Meaningful Data Presentation

Highly effective visual dashboards condense vital information into easily viewed numbers. Log in and know within seconds how your portfolio is performing. Skip hunting through numerous documents to find the answers you need to make investment decisions. Since everything updates in real-time, forget twiddling thumbs waiting on calculations to run and the right pie chart to generate.

When presenting information to a board of the directors, make the investment portfolio to tell a story. Which works better: asking the board to turn to page 2, column 5, row 10 of a spreadsheet or simply referring to the bar graph that easily shows performance over time. You need to tell a story. As Storytelling With Data writes, bar charts aren’t boring when they make data accessible to the end user.

3) Scaling Up and Integrating

Thanks to the cloud, new platforms integrate with all the essential data sources. That’s how data providers offer real-time insights into market trends, demographics, and property information. The same technology allows investors to scale up the investment portfolio as it expands and diversifies. Doing so with Excel is far more complicated, if not impossible.

4) Generate reports

See everything you need to make important decisions quickly and easily. With modern data providers, it takes just one click to run statements on profit/loss, balance sheets, depreciation schedules, and more. Forget debating between sort, filter, exclude, and data validation to transform your data into something you can easily understand. As a result of easy report-generating, investors present a clean audit trail.

Simply put, Excel and other spreadsheet software put real estate investors at a disadvantage. A University of Hawaii professor found that 88% of spreadsheets have errors in 1% or more of the formula cells. When the simplest of mistakes can cost billions of dollars, investors can’t afford mistakes. To learn more about how you can optimize your CRE portfolio, see all of STRATAFOLIO’s features. Leave the Excel behind and find a more efficient way to manage your investments today.


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Jeri Frank
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4 Reasons Investors Need to Say Goodbye to Their Excel Spreadsheets
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4 Reasons Investors Need to Say Goodbye to Their Excel Spreadsheets
Excel spreadsheets have been the backbone of investing for the last several decades but that should no longer be the case.
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