2016 Must-Knows for Real Estate Investors

Red Team’s Year in Review

What a year! I hope that you found 2015 and all its new developments to be as exciting and rewarding as we did.

Among the changes this past year is the implementation of what is called the TILA-RESPA Integrated Disclosure rule, which has literally changed the way we’ve done business over the last several decades.

The ball started rolling back in 2011, when the Consumer Financial Protection Bureau began working on making the loan process more transparent than it had been leading up to the foreclosure crisis.

As of October 3, 2015, the two “Know Before You Owe” forms have replaced the four disclosure forms you’re probably accustomed to: the Good Faith Estimate and the initial Truth-in-Lending disclosure (provided when you applied for a loan), and the HUD-1 Settlement Statement and the final Truth-in-Lending form (issued just before closing).

By introducing forms that are expected to be less confusing, they hope to make sure consumers understand at every step along the way, the terms of their loans and the fees that they are paying. The following new forms will be used in every mortgage transaction:

The Loan Estimate form includes the interest rate, the fees for both lender and third-party services such as appraisals and title insurance, estimated closing costs and whether the borrower has the right to shop for services like title insurance. It also lists any prepayment penalties or future expected changes in interest rates. Lenders will be required to provide this form within three days of a loan application.

The Closing Disclosure includes the final figures for closing costs, prepaid taxes and insurance, payments, fees and mortgage terms, plus what costs are being paid by buyer and seller—and for the first time, how much is paid to each real estate company involved in the transaction.

Although it should make understanding what fees are being charged and what amount of money is needed at closing much easier, the new variables are going to create some problematic confusion as well.

We’ve already witnessed many delays of the closing process, especially with Investors who were working with Real Estate Brokers who are not yet familiar with the new rules and forms. And it’s also creating fundamental challenges for the Lending industry as well…

Rather than waiting until the day of the closing to see the final figures, Borrowers now receive the Closing Disclosure three days in advance. If the type of loan changes, a prepayment penalty is added, or the rate changes more than one-eighth of a percent, another waiting period of three business days is required again—after the redrafted documents have been sent out and received by the buyer.

Another big change is that you’ll be seeing the closing documents drawn up by lenders, rather than by closing agents. While the law doesn’t require the lender to draw up the documents, it now holds the lender accountable for any errors.

The National Association of Realtors has advised its members to add 15 days to contracts.

The good news is that these forms have built in many protections for borrowers. But for Investors who are not paying cash, it can make the time to close from contract execution take somewhere around 45 days. With zero tolerance for error throughout most of the disclosures, it’s vital you’re working with both Real Estate Brokers and Lenders that understand the multiple new systems that have been introduced with these forms.

For those of you looking to navigate through this new process both smoothly and effectively, we invite you to connect with us at Red Team Real Estate. We work for our owners, making your investment in your rental property create as much value as possible!

Winning. Clients.

Red Team Real Estate and Property Management
Red Team Real Estate and Property Management was started in 2012 to focus on being the provider of quality service that has never been seen before in property management. Our approach is to serve our owners by providing professional, knowledgeable service with maximum value.

New Trends in Property Management

Which ones are shaping the future of your investment?

Part 1: Technology for Owners

Technology is changing the Property Management industry for both Landlords and Renters alike.The question is…which trends are shaping the future of property management right now, and most importantly, how can you use them to make the most of your investment? Here are Red Team Real Estate’s top two trends and the “must haves” for Investors or their Property Managers.

Management Software

Every REAL Property Management has to invest in Management Software to assist them in their account management. There’s so much paperwork and documentation involved in this business—it only makes sense to have technology working for you. Here are some of the most helpful and valuable tools for managing your property:

  • Accepting Payments via ACH
    Every month property owners and management companies spend a great deal of time and energy collecting rent from their tenants. All the while, costs for accepting, processing and depositing checks continue to escalate. Using a service like ACH saves you time, money and all the headaches typically involved in rent collection.
  • Reporting
    When you invest in technology and the management systems, it enables you to have clear and concise reporting. This includes monthly owner statements, cash flow reports and other information that owners need to review to confirm that their “Rental Business” is working.
  • End of Year Reporting
    Realtors that “do property management” have a hard time with end of year reports as well as with 1099s. When a Property Management Company invests in technology the 1099 process is automated and accurate. No hand completed 1099s for your owners or vendors!

Investing in technology for your Rental Business just makes good sense! Here are just a few other benefits you’re sure to appreciate:

  1. Web-based solutions available 24/7/365
  2. Risk management tools to help reduce losses
  3. Ability to edit payment information and schedule
  4. Robust reporting

Harness the Power of the Internet & Social Media

One of the latest and most effective tools for marketing to potential tenants and assisting property managers with showcasing their properties is online and through social media outlets. Sorry, folks…the world wide web isn’t going away, so if you’re not already proficient in rental property marketing, it’s time to hop on board!

  • Mobile Leasing Tools
    According to an article in Apartment Management Magazine, 87% of electronic device sales will be tablets and smartphones…which means property owners (or their managers) will need to accommodate this new generation of prospects and applicants with mobile online leasing tools. If you’re not already targeting mobile users you’re missing out on a huge slice of the renter demographic.
  • Application Process
    Most companies, regardless of industry, have embraced the Internet. It is amazing how many owners and “part-time” property managers are still using paper applications. What a mess! Investing in software systems allows you to do the whole application process online. With mobile online leasing tools, you’ll even have the ability to have a prospective tenant complete an application on an iPad or smartphone before they’ve left the property. Talk about efficiency!
  • Ratings and Reviews
    An online rating can carry a lot of weight with many potential tenants, and bad reviews tend to get much more attention than the good ones. Property management companies need to develop a program to get satisfied renters to post positive reviews and give good ratings. It may seem frivolous, but we’ve found that these types of programs are a worthy investment that can provide a good return.

Purchasing and learning how to use all this new technology may seem overwhelming to an Investor. Red Team Real Estate has a proven track record of giving their clients the leverage needed to stay on top of the most current trends. If you’re not already using a Property Management service, or your current company isn’t keeping up, we invite you to give us a call and speak with one of our experienced agents today.
  Winning. Clients.
Red Team Real Estate and Property Management
Red Team Real Estate and Property Management was started in 2012 to focus on being the provider of quality service that has never been seen before in property management. Our approach is to serve our owners by providing professional, knowledgeable service with maximum value.

Knowing the REAL Numbers

3 Easy Steps for Buying Profitable Properties

Just like buying a home for themselves, there is a full spectrum of reasons investors may have for buying a specific rental property. Some will buy strictly for the rental income, some will strategically buy into a neighborhood because of an expectation of appreciation, some need the tax savings and others are simply buying for the long term equity gains.

If you are interested in real estate investing, the following three steps are going to be fundamental in choosing a profitable property, as well as making it a heck of a lot easier!

  • You’re not ready to start moving forward until you’ve established where you want to end. Know where you are going in advance. Set clear goals and expectations of what you want to gain from your properties.
  • Finding an agent who knows your area and understands property investments is crucial! In addition, regardless of your reason(s), it is essential that the agent buying for you understands your specific short and long-term goals. Only then can they help you discern the pros and cons of individual properties.
  • Do the research and project ahead. In the ever changing world of real estate there may not be any guarantees but there are many ways to ensure you’re making the right decision. If real estate investing is new to you, don’t just jump into the deep end—find someone who can help educate and guide you into the right investment.

Are you ready to take the next step?

Over the years we have worked with many clients that were ready to jump into a property that, at face value, looked like a profitable investment. But even a peach of a property can turn to a lemon without drilling out the real numbers based on your individual reasons. Red Team Real Estate has created a 12-month worksheet that will measure your goals against your purchase. This unique and valuable tool will help you visualize what a property purchase is going to look like so you can ensure you’re making the most of your investments. Call us today @ 817-921-3545 for more information and a FREE 12-month investment worksheet!

Winning. Clients.