How to Keep Your Rental Property Paperwork Organized
Owners of rental properties must keep paperwork for both rental operations and business tax purposes. Depending on the number of units involved, organization encompasses dealing with dozens of documents received daily. Establishing a formal filing system helps rental property owners stay organized and allows easy access to important documents for filing taxes and research for answering any rental questions. The U.S. Census estimated in 2009 that more than 34 percent of the population lived in rental property. The most effective rental property owners use formal organization systems to conduct business.
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Things You'll Need
- File folders
- File baskets
- Paper labels
- File hangers
- Date stamp
- Desk calendar
- Scanner
- Digital storage device
Instructions
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Buy folders, file hangers, file labels and set up your permanent filing system. Every rental property owner has a preferred style for organizing folders, but suggested categories include tenant applications; legal notices; taxes; repairs; payroll; utility bills; and lease agreements or contracts. These headings include the basic documents involved in renting property. Attorney Janet Portman in her 2006 book, "Every Landlord's Guide to Finding Great Tenants," recommends maintaining a separate file for each rental unit, in addition to the other file folders. This process isolates applications, letters from the tenant, unit repairs and any other correspondence for the specific unit. A single folder allows easy access to paperwork, should the tenant call or arrive at your office.
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Establish a temporary filing staging area. Isolate one area for file baskets for current property repairs; tenant applications in process; regular payments required for monthly and quarterly bills; current tenant disputes, if any; and payroll issues, if you hire outside personnel to help manage your properties. The temporary document baskets remind you of immediate actions required to operate your rental business.
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Use a date stamp for incoming paperwork. Dating provides an easy reference to determine when a request, bill or letter arrived. Use the stamp with your initials and a brief comment to track actions on a particular document. For bill payments, for instance, list the date of arrival and payment date with amount remitted. Dating with short notations allows easy answers should questions arise.
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Set up a calendar for moving temporary paperwork into the permanent file. Avoid discarding any documents related to tenant applications or credit checks. This information provides documentation for any future lawsuits or tenant challenges.
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Scan property documents related to taxes and keep these documents on disks or in computer storage systems. Potential tax deductions from rental property include interest payments on the rental property mortgage; repairs on the property; and transportation expenses to and from the rental unit and trips to do rental business, including to the bank to deposit rent checks. Other deductible expenses include property taxes; hazard insurance; contractor fees; and professional fees necessary to operate the rental business, including tax preparation, repair services and lawn care for the rental property. These categories provide topical file titles for your collected scanned receipts, bills, canceled checks and credit card statements for the property organized in new files each year.
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References
- "The Unofficial Guide to Managing Rental Property"; Melissa Prandi; 2005
- MSN: How Smart Landlords Handle Rentals
- RealtorMag; Savvy Landlord-Investor's Survival Guide; Elyse Umlauf-Garneau; March 1, 2004
- NOLO: Ten Tips of Landlords
- "Every Landlord's Guide to Finding Great Tenants"; Janet Portman; 2006
- FindLaw: Tax Deductions for Landlord Responsiblities
Resources
- Photo Credit Comstock/Comstock/Getty Images
