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Managing rental properties is not everyone’s cup of tea. While landlords are able to use rental properties as a source of passive income. They often struggle to maintain accurate records of their rental income. They waste more energy and time in managing their rental properties than identifying ways to maximize any passive income they earn. Having a rent role helps landlords keep rent records, including rent payment due dates and rent collection. All of which are essential in daily property management operations.
As stated above, a rent roll is the income statement document that documents all money earned from your real estate investment. No matter the industry, investors want to see a nice return on their investment, and a rent roll can help landlords keep a record of that.
A rent roll is basically a snapshot of what you expect to earn from your rental property. Once you have a detailed record of everything. You can use it to analyze the actual rental income earned, any income you expect to earn, and opportunities to maximize your earnings.
You can set up a rent roll by the rental unit to easily track which tenants are late on their rent payments and those who consistently pay on time. Individual landlords might be less inclined to use rent rolls, but they are essential for commercial real estate investors. They provide a snapshot of rental units that are currently leased, which aids in future planning and decision-making. It also supports real estate transactions because lenders and buyers can use rent rolls as a negotiation tool when evaluating income potential.
Rent rolls can either help you customize your property based on specific rental units. They can assist you with maintaining oversight of an entire property portfolio. The general information included on a rent roll includes:
Rent rolls will also include general tenant information, including the tenant’s lease term. The unit’s monthly rent amount, and whether or not the tenant is current on their rent. In addition, it may include and rent concessions the tenant received upon signing the lease and the security deposit amount.
An income summary is also included on most rent rolls; it generally documents the total rent collected each month, including any extra rental expenses charge for things like pest control and maintenance.
The data for most rent rolls comes from various sources, including the lease agreement. The property appraisal report (provides data on unit room and size), the local tax assessor’s office (provides zoning and lot size information); and the MLS listing.
Rent rolls are fairly simple to create–you can either design them from scratch using an Excel spreadsheet tool, or you can find a free template online. If you don’t mind paying, rent roll templates can also be included in some property management software.
You can use a rent roll for lots of different purposes but we’ve highlighted some of the more common uses below:
If you’re finding the tenants on your rent roll are changing every year, it may mean the property has a high turnover rate. You are likely to miss out on income when units are vacant. Besides, advertising and conducting tenant screenings cost money. But seeing this type of trend on the rental roll could indicate that you need to make some changes to keep your current tenants.
If you compare each month’s data to the data from the previous year. You’ll be able to identify some trends in revenue or loss and identify what may have been the reason behind the highs and lows. You can also use income data to determine the average rental rates in the neighborhood to get an idea of how your property is performing compared to others.
A rent roll will help you analyze the percentage of tenants who consistently pay their rent on time. This data will also help you determine whether or not you should agree to renew the tenant’s lease.
Simply put, a rent roll is a report that provides detailed information to landlords about their tenants and their rental property. When used consistently, it also provides helpful insight about opportunities for improving the property’s performance and for maximizing gross rental income.