Keeping a rent roll is fundamental for most real estate investors and property managers. A rent roll is simply a written account of rents and other fees assessed to a tenant and when they were paid. Rent rolls can be hand written in a notebook or automatically generated by property management software programs.
When will you need a rent roll?
Here’s a short list of when keeping a rent roll up-to-date is essential:
- Settling a balance dispute with a tenant
- Preparing a final closing and deposit return statement when tenants move out
- Filing an Unlawful Detainer lawsuit to evict a tenant
- Annual lender audit (5+ unit properties)*
- Disclosing tenant payments to potential buyers when offering the property for sale
- When preparing taxes or conducting an internal audit
What should a rent roll contain?
For property management use, a rent roll is a summary of the tenant’s payment obligations as defined in their lease agreement. A standard format is shown in the example below.
Note than in every month except March the tenant paid rent on time. In March, the tenant did not pay rent by the end of the grace period (rent is due on the 1st, late after the 3rd each month). On the morning of March 4th an entry was made in the rent roll to indicate that a late fee was now due and the property manager delivered a late notice to the tenant. The tenant paid rent and the late fee on March 7th.
Some leases identify charges that are assessed separately from rent that should be entered into the rent roll each month. Some of these could be:
- Utilities paid by the landlord and split with the tenant. For example, some landlords split the actual monthly water bill with the tenant when the landlord provides lawn service with watering of grass and in-ground plants.
- Security alarm services that can vary in cost based upon remote access requests or false alarm charges.
- Repair assessments for items broken by the tenant.
Other reasons for keeping a rent roll?
Rent rolls are also handy tools for finding when a tenant last had a rent adjustment (increase or decrease). They can also be used as a quick reference when another property manager contacts you to inquire about the payment history of a past tenant.
If you need help or have questions regarding keeping a rent roll, property management or general real estate investment, drop me a line using: Contact Us.
*The State of California requires that commercial lenders conduct annual audits of a portion of their commercial loan portfolios, which typically includes site inspections and review of the property’s financial operating statements and associated documents (such as the rent roll).