There are different types of distressed properties in this volatile real estate market. Here is a quick view of a few of the most common types.  

• Foreclosures 

When the homeowners fail to pay the mortgage for a long time, the property will be foreclosed by the bank and sold off at lower costs to retrieve the mortgage value. In a foreclosed property, the title of the house is still in the owner's name rather than the money lender's name. This is the most common type of distressed property.  

According to CNBC reports, after the pandemic, when mortgage rebates and bailouts ended, foreclosures jumped by 32% in the first quarter of 2021. This sent a lot of good properties into the distressed sale category. Many real estate investors and business owners made good use of this and bought good properties at cheaper rates. Are you planning to do the same but don't know how? 

• REOs 

REOs or Real Estate Owned or Bank owned the bank already owns properties. The bank foreclosed on them where the previous owner had their mortgage. When the original owners fail to pay their due mortgage charges, the bank that gave the mortgage has an option to make the property in their name. 

When this happens, even if the owners do not vacate the home, they can be evicted by the bank. After this, the bank can sell the property at a lower cost to get a return on its investment and recover some of its losses.  

• Short sales 

Short sales are a unique situation where the money lender bank does not make the property in its own name when mortgage payments fail. But they agree with the owners to make a sale at a lower price to cover the mortgage costs and retrieve the lender's money.  

Buying a distressed property comes with its own unique advantages that real estate business owners can benefit from. Here is how.  

• Cheaper prices 

Since the owners or the money lending banks are selling these properties to retrieve their money, they have a lesser rate than the actual market value. You can evaluate and inspect the property and see that you are getting a great property at a throwaway price, then it is a great investment.  

• Has potential for growth in the future 

As a real estate property manager, you must know how to upscale an existing property to get higher market value. So, buying a distressed property can help you “buy low, sell high.” You can flip these properties, revamp them and sell them at a much higher price than your original investment. This will positively impact your ROI and increase your grasp of the real estate market.  

• Can have lots of repair work 

When people sell properties at lower values, there is a high chance that they did not spend money on repair works if they did not have money to pay the mortgage; they sell as-is. This means that some of these houses can be in seriously bad condition. So doing a house inspection before buying is a wiser investment journey.  

• Title and ownership issues 

The previous mortgage on the distressed property will be wiped off the payments you make during the sale. They are in the previous owner's name, and you might get stuck with them. But there is a high chance of getting burdened with unpaid property taxes. It is better to investigate all these before investing.  

• It can take longer to close 

Foreclosed or REO properties do not face this problem because they are already closed, and the deal has been closed. But if you are looking to bid on a short sale home, then there are chances that it might take a long time to close.  

Not all software is made equally; there are advantages and drawbacks to all of them. While you make a technology selection for your particular business, you need to keep these in mind to make a wise choice.  

1. Make a list of your needs 

All project management software has different features to offer. You need to make a detailed list of what you want to get from your project management software to understand which fits best for your business. Make a list of the challenges you face in manual project management, the restrictions you face regularly, and the work that needs to be automated. After this list is made, you can tally that with the list of available features in each project management software to understand which is the best fit for you. 

Some companies only want to do internal communication between property managers and agents, some want to do property management, and some even want construction management. There are different software solutions for all of them, and some offer a cumulative support system. Understanding your own needs will help you make a fruitful purchase. 

2. Create a list of all available project management software 

There are many real estate project management software out there in the market. The strategy and leadership at your company need to make a list of these to know which one fits best with your needs and is cost-effective too. Make a list of things like ease of use, reliability, scalability, if it is mobile-friendly and if it has post-integration support, and such things. Why? More than 73% of global executives in business feel that reliability, ease of use, and ease of integration are the biggest factors affecting a project management software selection.  

3. Test and get trails of each software 

More than 77% of successful projects use project management software to run their business. But that does not mean they are the right fit for you. You need to ask your IT outsourcing partner to give you trial runs and tests of the software options and make you understand which one would work best for your business needs.  

4. Check the comfort of your staff with the software 

You are not the only one who will work with the software you integrate into your system; your property managers, agents and realtors, and back office staff will also take the load. So it is best to understand the technology comfort level of your staff before taking the leap. Ensure the software dashboard is easy to use for not-so-tech-savvy people, too, for better inclusivity and resource optimization.  

5. Get detailed feedback from all stakeholders 

When you pitch your project management software options to all stakeholders in the office, get feedback from all of them to understand what they need or what can be better. As a real estate business owner or manager, it is important that you get all stakeholders on board before making a purchase to avoid any miscommunications in the future.  

6. Understand and justify the cost of investing in the software 

1. Never invest in software because it is trendy 

There is many project and property management software in the market; just because your competition uses one does not mean it is the right one for you. Do not make an investment in software because it is in trend. That can be the biggest mistake one can make in business management.  

2. Not taking the opinion of your staff 

Your staff has on-ground ideas about what their needs are from a project management software; if you do not take their opinion while integrating new software, then it might not come to any use. They are the ones that will use the software on a daily basis to streamline your work, so their opinion is vital.  

3. Not getting external support to adapt to the new tech 

When it comes to new technology it can be hard to handle, and if your IT outsourcing partner does not provide enough technical support like staff training, troubleshooting, holistic integration and such, then you are in a soup. You need to make sure that you have enough technical support, at least in the preliminary days when you are getting familiarized with the new workings.  

Deloitte research believes that Robotic Process Automation will be a universal thing for almost all businesses in the next 5 years. If that is any statistics to take into account then you must rethink your technology selection in project management. Read on to know the rising trends and uses of RPA in real estate that will positively impact your ROI. 

• Tenant onboarding 

The tenant onboarding process has a lot of tasks that work in patterns. Yes, there are some tasks that are catered to individual tenants but the rest of it can be simply automated with RPA. No more losing out on clients because of the delayed onboarding process. Here are the things in tenant onboarding that you train your RPA bots to do, 

1. Creating a new tenant application  

2. Conducting background checks 

3. Verification of tenant financial statements, employment, etc. 

4. Approving or rejecting new tenants 

5. Drawing up lease 

6. Criminal record verification 

• Automated payment reminders 

The pandemic has left all of us practicing social distancing. It is nearly impossible to visit every tenant or write up periodic reminders for tenants and vendors to get rent and other payments. RPA bots can simplify this process if you feed them the data. It will mimic the human task of sending reminders in regular intervals to ensure timely payments. 

Late rent payments have also become a significant concern in pandemic times due to the loss of jobs. By 2021 January, the state of California alone had $400 million in unrealized rent from tenants. Sending reminders to these people can be a taxing job; a bot can have you covered.  

• Portfolio Management 

From preserving and managing assets to increasing value, all come under portfolio management in real estate. RPA bots help property managers to make a system-generated list of already sold or rented properties. This way, you will not have to look through piles of papers to get scalable data and understand which properties need better sales.  

• Accounts and Bank reconciliation work 

Extracting bank statements and accounts reconciliation services can be very hectic. But you still need to get it done to close your books on time. RPA can auto-download statements and get them logged into the system for you to work with. Accounts Payable and Accounts Receivable work can also be automated with RPA. Invoice uploading and transaction requests can all be simplified with this. 

• Perfect NAV Calculations 

Assessing the Net Asset Value (NAV) of your property for Real Estate Investment Trust (NEIT) is crucial in understanding your position in the market. NAV calculations drive the current asset values and other future asset expansion plans. Validating and processing these data can very well be automated with RPA solutions.  

• Automated KYC Compliance  

Know Your Customer (KYC) documents are highly confidential, and human handling of these can lead to fraud. When you automate the personal document verification of tenants and vendors alike, your credibility increases, and the work becomes faster at the same time. This system can even send alerts to you when there are discrepancies in the personal documents of clients to help in intervention. 

• Document processing and data entry work 

Any real estate business is bound to have an overwhelming amount of paperwork and data entry requirements. Manually doing them will lead to a lot of errors. From form fill-ups, document processing, uploading, verification, etc. can all be automated with RPA bots and make your life easier.