Setting Up Rental Property Files
As you begin to accumulate rental properties, you will want to have a solid system down to keep track of your investments and all of the critical paperwork that each property needs to have on file. I am going to share with you the system that we use in our office.
In our filing cabinet for rental properties, we have a master hanging green file folder that keeps reports and summarized information about all of our properties for quick reference and management. Each of these is kept in a manila folder. These are the master reports/records that we keep: Lease Log, Rental Income Summary Report, Property Insurance Report, Property Taxes Report, and our Housing Analysis Spreadsheet.
The lease log is a record of when all of our properties had leases (or rent to own agreements) signed, and when they are due for renewal. It also includes what we currently charge for rent and allows us to enter in a new amount if we are going to raise the rent when the lease renews.
The Rental Income Summary Report keeps track of all of the rent that is due to us on a monthly basis. This way we know who needs to be served a three day notice because they haven’t paid rent. We also track late fees and any other payments due from tenants on this form.
The Property Insurance Report lists quick reference information about all of our insurance policies by house. This way, we can track when policies need to be paid, if they are paid out of escrow or by us, and we have a quick reference of the policy number and claims telephone number should we need them. Additionally, looking at all of our premiums at a glance can give us a gauge of whether we are overpaying for certain policies and need to shop around for a better deal.
The property taxes report lists the tax appraisal value and taxes due for the current year and the year before. At a glance, we can anticipate increased expenses for our rentals and can see any unreasonably large tax increases that we may want to contest.
Lastly, our Housing Analysis Spreadsheet is an excel document that we periodically update. It tracks the amount of equity we are gaining and our current overall cash flow status for all of our rentals. It shows me how much money we are in effect “saving” every month just by paying down principal and gaining modest appreciation.
After this initial folder of summaries and reports, we have a hanging green file folder for each property. Within each properties file, are individual manila folders with the following documents for each property: Mortgage Statements, Property Insurance, Property Taxes, Property Management Statements, Rental File (tenant lease, tenant correspondence, etc.), Repairs and Expenses (receipts for current tax year), Appraisal(s), Deed, and Purchase Contracts and Closing Documents (includes HUD settlement, title insurance, sales contract, loan application, etc.).
Until my next post,
James
P.S. All these forms and additional training materials on how to setup your real estate investing business are included free for our Real Estate Investor Bronze Members.
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