As a landlord, you have to stay organized if you want to succeed. You’ll be dealing with many types of paperwork, including property deeds, rental agreements, and tenant applications, and managing finances like mortgage payments, insurance payments, and rental income.
Keeping things organized is vital for several reasons:
- Easy referencing. There are many occasions where, as a landlord, you’ll have to look back at some of the documents you’ve gathered or the history you’ve had with a client. For example, you might need to refer to a lease agreement to determine whether or not a tenant has violated your terms. Keeping things organized allows you to quickly make these references, and reliably find the information you seek.
- Cost efficiency and ROI. Organization can also help you improve your cost analyses. If you keep detailed records on everything financially relevant, including your income, ongoing expenses, and periodic unusual expenses, you’ll be able to make better forecasts, and better estimate which of your properties are most profitable.
- Legal matters. Occasionally, you may have to face legal issues as a landlord. For example, you may have to evict a problematic tenant, or you may face an audit. In these cases, you’ll need to be prepared to provide sufficient documentation to prove you’ve done things right. In these moments, you’ll be glad you were organized.
Fortunately, even if you’re disorganized in your personal life, there are some steps you can take to improve your organization as a landlord.
How to Stay Organized
These are some of your most important strategies:
Work with a property manager. Your first option is a fairly comprehensive one, but it might not be right for every landlord: work with a property management firm. Property managers are dedicated to controlling and organizing most of your responsibilities as a landlord. For example, they may collect payments on your behalf, help you find new tenants, resolve basic tenant disputes, and help you document all your expenses. In return, you’ll pay a monthly fee, which is easy to document and keep track of. By working with a property management firm, you’ll essentially have a built-in organizational element to your strategy, and your burden will be greatly reduced. Of course, not every landlord will want to work with a property management firm, since they may prefer to take matters into their own hands, but it remains a solid option for most property owners.
Operate digitally as much as possible. Another option is to digitally transform your property management strategy, relying on software, apps, and automation as much as possible. Working digitally, you’ll find it much easier to keep track of all your paperwork and messages; in fact, many management apps organize your materials automatically. Keeping things digitally also means you don’t have to make physical space for your materials, and you can easily make copies to back up your work. Certain elements of your digital strategy, such as collecting rent payments online, can also help your tenants stay organized.
Separate your files by property. If you have multiple properties or plan on owning multiple properties in the future, make sure you keep all your files separated by property. This is going to increase in importance with the number of properties in your portfolio. While it’s reasonable to keep some high-level files, such as a master spreadsheet where you track your income and expenses on a global level, if and when you need to make reference to past documents or transactions, you’ll be thankful to have everything segmented by property. This is true regardless of whether you store things physically or digitally; if you use digital file management, you can tag your files in multiple ways, turning your organization into a complex but intuitive web.
Understand and prepare for taxes. Taxes are a complicated matter for most landlords. You’re going to owe taxes on any rental income you make, but you should be able to deduct most of your expenses, reducing what you owe. You’ll need to provide evidence for every transaction, including both your income and your expenses, and that means setting up a dedicated file for tax-related documents. Of course, that also means working hard to understand how taxes work, long before they’re due.
Take notes and document everything you can. Over the course of your tenure as landlord, you’ll likely encounter many interesting and noteworthy situations; for example, a tenant may request a small repair or you may have to address a complaint about a neighbor. When these events inevitably unfold, it’s in your best interest to document them—even if they seem innocuous at the time. You never know when they could be the start of a pattern of behavior. Take notes, take photos and video when appropriate, and log them with the date they occurred.
Utilize automatic alerts. Part of staying organized is keeping track of all your to-dos, appointments, and responsibilities. It’s hard to keep all these things top of mind, especially when you have multiple properties to manage, but you can make things easier on yourself by utilizing a calendar app and a series of automatic alerts. Get notified when it’s time to inspect or maintain a property, and schedule yourself reminders to follow up on non-urgent repairs.
Commit to daily catch-up. Disorganization doesn’t simply happen one day; it starts gradually, then spirals out of control. If you commit to evaluating and addressing your standing issues on a daily basis, you’ll keep your work much more organized. Better yet, because it’s a daily task, it will eventually become an ingrained habit, and you won’t have to think about taking action; instead, you’ll do it intuitively, out of habit.
Enlist the Help of a Property Management Firm
If you’re interested in buying your first rental property, or if you’re looking for help from a property management firm, contact Green Residential today! We’ll provide you with a free analysis of your current property and show you how we can make your life easier.