Real estate investment is all about the numbers. You need to do a lot of math to pick the right properties, get loans, advertise rentals, and make daily decisions. Each number can give you important insights as you build your property portfolio.
You might be wondering how to keep track of all these numbers. The answer is a rent roll. This is a report that helps investors and landlords keep an eye on how their rental properties or whole portfolios are doing. Rent rolls are very important for investors, landlords, and lenders. Learn to make a rent roll and consider using them regularly.
What is a Rent Roll?
A rent roll is a report with lots of details about tenants, rents, and properties. It helps landlords and investors manage their properties better. It’s used to check on how a rental property or a group of properties is doing and find ways to improve.
Rent rolls are a bit like profit and loss statements but cover more details. They include tenant details (like when they started and will end their lease), rent and other money coming in, facts about the property (like when it was built), and management information.
These reports can be made at any time during your investment and should be kept up-to-date by landlords or property managers. Rent rolls that cover many properties are usually managed by the investors themselves. They’re common in commercial real estate, but can be used for any rental property.
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How a Rent Roll Works
A rent roll puts all the information about a property into one clear report, usually a spreadsheet. You gather the information and put it into the report to make it easy to understand. Think of it as a full overview of your rental property.
Creating a rent roll isn’t a one-time thing. It should be updated as things change, like when a tenant moves out or for tracking yearly income.
A rent roll includes specific information and calculations about a property. Being accurate and consistent is key to make this report useful. Here’s what you should include:
Property Information
This is the basic part of a rent roll, and you update it whenever you add a new property. You should gather:
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Address
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Property owner
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Management company name
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Property type (single-family, multi-unit, etc.)
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Property’s zoning (residential, mixed-use, etc.)
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Market area (urban, suburban, etc.)
House or Unit Data
Here, you write about the property’s condition and structure, like the number of units, amenities, and more. Always include:
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Unit number (such as #1, A, etc.)
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Square footage
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Number of bedrooms
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Number of bathrooms
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Additional features (garage, deck, shed, etc.)
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Amenities (common-area swimming pool, parking deck, shared laundry, fitness center, etc.)
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HOA Status
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Lot size
Tenant Information
Tenant information is the main part of a rent roll and needs regular updates. Include:
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Tenant name
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Monthly rent
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Additional rent (pet fee, additional storage fee, parking fee, etc.)
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Rent due date
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Date rent paid
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Past due rent
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Prepaid rent
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Security deposits held
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Lease start and end date
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Rent concessions given upon finalization of a lease
Rental Income Data
This section is about the financials and includes:
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Total monthly rent collected
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Total annual rent collected (including any annual fees charged to the tenant such as carpet cleaning, pest control, or landscaping)
Benefits of Having an Accurate Rent Roll
The biggest advantage of a good rent roll is it helps you organize and manage your property better. Accurate information is crucial for efficiency. The numbers in a rent roll help with decision-making for a successful property.
Rent rolls have many practical uses. Landlords can decide when to advertise units to reduce empty times. Investors review them for cash flow and to spot less profitable properties. Private lenders might want details about the units for financing decisions.
How Buyers Use a Rent Roll
When buying a rental property, a rent roll becomes a valuable tool. It offers a clear snapshot of the property’s current financial health and potential future earnings. Here’s how buyers use rent rolls:
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Assessing Property Value: A rent roll gives buyers detailed insight into the rental income the property currently generates, which is key in determining its value.
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Understanding Tenant Stability: By reviewing lease start and end dates, rent payment history, and tenant longevity, buyers can gauge the stability and reliability of current tenants.
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Evaluating Property Management: The rent roll can reveal how well the property has been managed, based on factors like occupancy rates, consistency in rent collection, and tenant turnover.
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Planning for the Future: Buyers use rent rolls to predict future income and expenses, helping them make informed decisions about their investment.
How Landlords Use a Rent Roll
For landlords, a rent roll is an essential management tool that helps in several ways:
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Tracking Rent Payments: It allows landlords to monitor who has paid rent, who is late, and any outstanding balances, ensuring a steady flow of income.
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Managing Tenant Information: Landlords can quickly access key tenant details, including lease terms and contact information, which is crucial for effective communication and lease management.
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Identifying Income Trends: The rent roll helps landlords spot trends in rental income, such as which periods have higher occupancy rates or when rent increases have been successful.
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Facilitating Maintenance and Upgrades: By monitoring the age and condition of properties, landlords can plan for maintenance and upgrades, ensuring the property remains attractive to current and potential tenants.
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Enhancing Strategic Decisions: With a comprehensive view of their portfolio’s performance, landlords can make strategic decisions, like investing in more properties or making changes to increase profitability.
Summary
Numbers are vital in real estate investing. They guide you on buying properties, getting funds, and knowing when to step back. In rental real estate, they show your potential earnings. A rent roll is a great tool for keeping track of these numbers, no matter your role in the property.
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