Four Steps to Organizing Your Rental Property Records

Did you become a landlord this year? For those of us who found ourselves with an extra house, organizing our rental property records is an important step in tracking rental income and expenses. Without some sort of record keeping system, pulling together those records at income tax time will be a nightmare.

Organizing your rental property records doesn't have to be complicated. All that's required are some 11.25" tabbed file folders, a black Sharpie, a duplicate receipt book, loose leaf notebook paper, and either a file rack or file box. For organizing my own rental property records, I use a plastic file rack that hangs on the wall of my office just inside the door. This location is easy to see and convenient as well.

For single property managers, a single set of labeled files is more than enough. If you are managing multiple properties, you will need separate files labeled for each property address.

How to organize your rental property records

1. Designate a file for the lease agreement and rental applications. The rental lease agreement is a legal document that lays out the condition of the lease between you and the tenant. The rental application is the form that contains sensitive information such as your renter's contact information, employment information, and other data which a landlord may need to refer to often. Organizing both these documents in a single file folder makes it easy to access quickly when the information is needed.

2. Set up an rental payments/income file. Rental income is the rent check you receive from your tenant every month. This income should be recorded on a ledger of some sort ~ I use notebook paper myself ~ with the date the money was received, how the payment was made (check or cash), and the amount of the payment. If you provide your renters with a receipt each month, the receipt stub should also go in this file.

3. Designate a file for rental related expenses. Many rental related expenses are deductible at tax time, which is why tracking all these costs and keeping them organized is important for your bottom line. Just like with the rental payments, I track all my rental related expenses on a sheet of notebook paper which is clipped to the inside front cover of the file folder. The receipts are then placed inside of the folder and noted with the date they were paid & the check number used.

4. Identify one or more miscellaneous files. Miscellaneous files organize those odd bits of information that really don't fit in any other category. It's here where a landlord should store warranty information, tax statements, insurance policies, old leases, appraisals, water right agreements, deeds, and other pertinent information associated with the rental property. Since miscellaneous files can get bulky over time, one strategy might be to break apart this information into two separate file. I split my miscellaneous file into one file folder for deeds & insurance policies and a second folder for everything else.

As you can see, organizing your rental property records just isn't that big of a deal. Some file folders and the discipline to track everything is all it really takes to keep your rental property information organized in a way that is both easy to find and will makes sense at tax time.