The Definitive Guide To Real Estate Document Management

Most real estate firms are typically marred by stacks and stacks of paperwork, ranging from legal forms, property brochures, disclosures, contracts, agreements, and several other documents. If you're looking to streamline your flyer creation process, you might want to consider using an AI flyer generator tool.

The sheer volume of information, especially the paper-laden kind, that needs to be sifted through every day in the real estate sector can leave you swamped and choke out your resources pretty quickly.

So how do we get around this issue? The answer is Document management solutions. 

Document management involves using an automated AI software to access, manipulate, categorize, store, secure, retrieve, and track electronic business files for a business or firm.

Typically, real estate automation solutions help firms store files at a consolidated hub to expedite business workflows and manage documents efficiently. This lets companies and their investors extract and swiftly obtain access to critical information.

The obligation of document retention in the US

The real estate documents must be retained by brokers all across the US, and are regulated by California Business & Professions Code Sec. 10148, which states: 

“A licensed real estate broker shall retain for three years copies of all listings, deposit receipts, canceled checks, trust records, and other documents executed by him or her or obtained by him or her in connection with any transactions for which a real estate broker license is required.” 

Failure to retain these records is liable for revocation and license suspension by the Bureau of Real Estate. A clarification made effective from January 1, 2015 excludes instant messages, text messages, and tweets (unless generated to be retained or to establish a permanent record). The law includes emails as well.

Benefits of document management system in commercial real estate

Document management for real estate firms ensures proper organization of documents, quick document search and find, and provides you with all the relevant paperwork with no delays when dealing with a critical real estate transaction. Integrating the best real estate CRM with a document management system enhances client relationships, streamlines operations, and increases efficiency.

Here are some benefits of implementing a robust document management system in your real estate firm -

1. Streamlined data management 

Real estate agents have several high-value clients, and processing documents for each and every transaction can become a chore pretty quickly. Since a real estate transaction involves dozens of documents, retrieving them for specific clients on short notice can get overwhelming for the agents.

Also, since real estate transactions take anywhere from a couple of weeks to even months to show up in an account, all relevant documents must be retained until the transaction gets completed.

Implementing a robust document management system ensures that your firm stores and preserves documents in an organized fashion and a decent condition, thereby streamlining your data management.  

2. Prevent data breaches

Threats to data security in the real estate sector are always high as agents deal with high-value transactions, and all critical information must be preserved and, if possible, encrypted.

Role-based access control provided by top-notch document management systems ensures that only authorized users have access to specific pieces of content. A real estate document management system also offers better backup and disaster recovery, which helps prevent the loss of information. 

To prevent security breaches, you must have a decent real estate document management system in place that prevents third parties and hackers from obtaining access to transactional data.

3. Regulatory compliance 

Every transactional deal in real estate harbors certain legal compliances that must be adhered to at all costs. Having the appropriate documentation in different formats as required by legal authorities is pivotal.

To ensure that you have access to all transactional and legal information from the involved documents, you need to have a document management system. This system will ensure that you do not miss out on any stipulated compliances enforced by the authorities.

Types of commercial real estate data

Many layers of CRE data provide valuable insights about a property owner, their retained properties, the accompanying financials for those properties, and much more.

CRE data encompasses not only transaction or market data but also several other data points, some of which include -

• Commercial property data- This data type incorporates an asset type, its geographical location, building and lot size, number of units, and more.

• Transactional data- Transactional data reports the past and present worth of a property, along with its potential ROI for the proprietor.

• Commercial mortgage loan and lender data- Commercial loan data reveals the previous and current debt associated with a property and its proprietor.

• Commercial tenant data - Tenant data provides insight into the current and past tenants, revealing their history of residing in the property. 

• Ownership data - The name and ownership data is self-explanatory, as it dictates who owns a property, which is crucial if an individual wishes to purchase that property or sell some service to the owner.

• Market data - Market data dictates whether to buy or sell property along with its price, whether you could redevelop a property and for what type of return, whether you should invest in certain building amenities, and more.

Ways to leverage CRE document management systems:-

• Securely and seamlessly share vital documents with prospects and internal employees, which helps eliminate manual, error-sensitive, and unsafe processes.
• Provide investors with relevant documents within their investor portal, which helps eliminate the need for additional logins or complicated passwords.
• Utilize authorization levels to issue documents to an investor, be it at a project level or only to certain employees within the company.
• Inform investors or employees when new documents have been uploaded to the system, stimulating business processes.

Real estate document management use-cases 

Since real estate documents are associated with a massive pile of paperwork, it becomes imperative to have a real estate document management software in place that offers the following use cases -

1. CRE comps 

CRE comps (comparables) is a term used in real estate appraisal that refers to properties with identical characteristics. CRE comps compare general property information, sale price, sold date, buyers/sellers names, zoning, and cap rate. The cap rate defines the rate of return expected on a real estate investment property.

For instance, if you are considering investing in a property, CRE comps help you gather intel on properties with similar characteristics and provide a price comparison to ensure that the deal you have settled upon is the best one that you will get.

CRE comps get typically used for one of two forms of research -

1. To assess a target property's worth or portfolio.
2. To reveal additional business opportunities analogous to the one recognized.

A document management system organizes several layers of property and sale transaction data in the market to inform CRE comps. This gesture facilitates wise decision-making and ensures that you receive data that is up-to-date. 

2. Offering memorandum

An offering memorandum is a legal document that describes the objectives, potential risks, and investment terms associated with a private placement.

It comprises a company's financial records, a comprehensive guide of the business operations, management biographies, and more.

Securities, such as private placement that are exempt from registration provisions under federal law, provide disclosure through the offering memorandum.

Investment offerings that require complete registration with securities regulators, such as mutual funds, provide written disclosure to investors through a summary prospectus.

Due to these reasons, a sound document management system is crucial as it helps store and extract relevant information from an offering memorandum, which helps facilitate informed decision-making.

3. Lease abstraction

Lease abstraction is the process of obtaining information from the lease and consolidating it into a single, easy-to-read document that facilitates swift analysis. The primary terms in leases are typically broken out in an appendix, which lets the reader extract information even from lengthy lease documents. However, after renewing the lease, the document might have several appendices, additions, and addenda attached, further complicating the process of document parsing and increasing the chances of errors. Lease termination, a critical aspect of lease agreements, also adds complexity as it involves specific conditions and notice periods that must be accurately documented and managed.

However, after renewing the lease, the document might have several appendices, additions and addenda attached, further complicating the process of document parsing and increasing the chances of errors.

This is where you require a document management system that systematically stores lease documents, helps organize lease abstracts, and provides you with access to these documents with no delays.

A competent document management system provides cutting-edge analytics and data validation for lease abstraction. Such a system alleviates the odds of obtaining outputs riddled with human error, further streamlining your real estate business processes.

4. Rent roll processing

The rent roll document is often utilized by rental property investors as it helps boost gross rental income and enhances the performance of their property. A rent roll report provides insightful information such as tenant turnover, a rent hike, and the occupancy rate of a property.

The property holders must get their sheets updated promptly after obtaining the rent amount from the tenants, regardless of if it is commercial or residential. 

It is pivotal to maintain and systematically organize up-to-date records of rent roll processing to track your property's performance and even provide relevant documental arguments in case of any disputes. 

We at Docsumo, provide intelligent real estate document management solutions and enable CRE analysts to extract rent roll data in a structured format, eliminating the need for manual data extraction. 

5. Trailing twelve months

A trailing twelve months (T12) is a financial report that reveals the previous twelve months of operations of a multifamily property. A T12 is applicable for apartment buildings as well as other multifamily property types.

A T12 gets calculated by evaluating a property’s financial reports like balance sheets and income statements. T12 data reports provide lenders and investors with an analysis of the property's performance and ways to boost its value.

Extraction of T12 data reassures the investors and prospects of their real estate investment options, and thus, its well-organized retention is pivotal.

Docsumo : The smarter alternative to real estate document processing

Docsumo is an advanced platform that facilitates the extraction of information into an organized and well-structured format from unstructured PDFs, scanned images, and documents.

Manual data extraction, on the other hand, fall victim to several downsides such as -

• Extremely time-consuming
• Prone to errors
• Massive data sets
• Financially and mentally taxing

Since the documentation sets required are enormous, the process of extraction offered by us is boiled down into the following steps to facilitate swift extraction and compilation -

1. Have the documents imported into the Docsumo interface.
2. The filters tab provides dates, individual numbers, and other expressions to facilitate the extraction of data in any format.
3. We provide exceptional image preprocessing features that include noise reduction, contrast correction, deskewing, and several more to render amazing accuracies in data extraction.
4. You can also convert PDF to CSV, Excel, JSON, and XML file formats by downloading the extracted information for any date range in the desired format.
5. Our simplistic yet intuitive UI lets users import a document, process it, obtain all data fields, and share the information with other apps, within a minute.

With the help of Intelligent OCR technology, our software solution extracts and presents data in a well-structured format, and can thus be used to extract financial data, generate a T12, rent roll data, lease abstraction, report analytics, and several more. 

With Docsumo, you can reduce your overall document processing cost by 70% reduction 98% accuracy by reducing manual errors and receiving precise data. It also lets you send extracted data by providing integration with API or Webhooks.

Automated data extraction with Docsumo

An efficient automated system helps extract data and generate finished reports. This step can help iron out most complications in the collection and analysis of data.

We are a preferred choice by several real estate building managers, record keepers, accountants and investors, investment partners, and associates to ensure the safe retention of financial information.

Our professional team at Docsumo aims to eliminate all downsides of manual data extraction with its intelligent categorization of documents complemented by an intuitive UI. Within a few clicks, you can fetch, categorize, and compile heaps of data that gets delivered to you swiftly and is rid of errors.

If you are still unsure how we operate and simplify real estate proceedings, safely store and organize data, and present it to you at a moment's notice, book a free demo with us.