Documents are often an overlooked thing in many areas. How often do you get a bill, invoice, or receipt of some sort and then just kind of pile it up on top of other documents you’ve received? The only time people think about the collections of documents is during tax season.
As someone who spent years doing Document Control, I’m a bit passionate about documents, the ones you need, how to maintain them, and how to be able to retrieve them quickly.
If you’re thinking of becoming a landlord, or are already one, then there are some documents that you’ll want to make sure you keep on hand, in an organized fashion.
Organizing Your Documents
I’m starting with organizing your documents so that you can either get rid of the unsorted piles or get started on the right foot if you haven’t accumulated any yet. Being a landlord is being a business owner, and you need to treat your documents in a business-like way.
The document suggestions below only pertain to the actual properties that you are running. If you hire employees or contractors, then there is a whole other system that you’ll want to set up that should be part of the main folder, but we’re not going to break that down here.
These days a lot of documentation is electronic, though not all. For electronic documents, you’ll want to have them in the cloud somewhere, so using a service like Google Drive or OneDrive is a great decision. You can always keep backups on your computer or external hard drive if you’d feel better having a copy in a second location.
Now that you’ve got yourself a place in the cloud to store them, so you can access them anywhere at any time, you don’t want to have an electronic equivalent to a paper pile. There are several different ways in which you can organize your documents electronically, and the only right way is the way that will work for you.
I do suggest that you have one main folder to keep all documents with regards to you being a landlord. Inside that folder, you can break it down by legal documents, properties (especially if you own more than one), Utilities, etc. Or, you may find a way that better suits you, and that’s fine.
Even in the electronic age, you’re still going to have paper copies of documents and lots of them. You’ll have blank forms for your tenants to fill out, contracts, invoices, bills, etc. You’re going to need to come up with a way to organize them, maybe have main categories and then subcategories. Again, the only right answer is finding a system that works for you. But I do suggest that you have them separated from all other documents and papers you have. You don’t want to mix up your personal documents with the ones you need for your rental properties.
Important Documents to Have
Now that you know how you’re going to organize your electronic and paper documents when they start accumulating, you need to know which ones are important to have in your possession.
You may need more than one checklist, depending on the size of your property, if you have multiples, and especially if you have multiple categories of properties, such as residential and commercial.
At the very least, you’ll want to have a checklist that ensures upon moving out; the outgoing tenant has completed everything required of them, including items such as cleaning, key returns, etc.
Now, you can add to that checklist, but I recommend creating another one for preparing for a new tenant to move in. You may want to include things like painting the unit, steaming cleaning the carpets, repairing anything broken.
You’ll customize these checklists based on your properties, processes, and what you feel works for you.
Rental applications will have at least two categories in your organization, a blank template and a completed application. You might want to subcategorize the completed applications though to those you are interested in and those you aren’t. Again, it depends on what system you think works for you.
You’re going to want to save a completed lease contract, and I suggest that you have a physical and electronic copy of these. Another step you may want to take is to attach the rental application to the signed lease.
Depending on your system, you may have all of your leases in one folder, or you may have things broken down by unit number, where you put all documents related to that particular unit. Either way is acceptable. However, if you are breaking it down by unit, I do suggest that you archive (have another folder) for past tenants and keep the unit folder updated with only documents that pertain to the current tenant.
You may require different information from your tenant that is not on other documents. If you don’t have an emergency contact on your application or lease, then you’ll want to have a separate document for that. You may also require information with regards to utilities, which is crucial if you’re paying for them.
As a property owner, you will get a lot of information regarding your property, and the land your property is on. Keep all of this information together as you will want these when April comes around, and you’re able to deduct mortgage interest on your taxes.
Taxes and Financial Records
Financials is another big category, and it may need subcategories. Just like the mortgage documents, your tax and financial records are significant, and I do recommend having both physical and electronic copies of these, and your mortgage records.
Something a little less critical than your mortgage and tax documents are your templates. And, maybe you don’t even want this category, and that is ok. I do feel that it will save you some time though, if you have all of your blank files in one, such as renewal letters, notices, maintenance requests, etc.
Time and Stress Saver
While this might seem like a boring and tedious task, you’re going to thank yourself when tax time comes, or if you get audited. You’ll be able to access what you need, quickly, without worrying about forgetting something. It might be a bit of extra work upfront, but it will save you time in the long run. You only need to set up your system once, then it’s just maintaining it, which takes no time at all.
If you’re looking for freedom from costly repairs or anything else that comes with owning rentals, please contact us. We buy property as-is, with or without tenants.