Owning a rental property means having to deal with some paperwork. From buying the property to renting it out, you need to make sure that all parties are protected and the best way to do this is to have all agreements in writing.
It’s best practice as a landlord to have a lease agreement discussed and signed. Documenting and discussing expectations and consequences make it easier for the tenants to follow the rules and for you to be prepared when they don’t.
It is crucial that they know where your responsibilities end and where theirs begin. Always seek professional advice if you’d like to be updated with existing or new rental laws in your state. Keeping the necessary documents is important to protect you, your property and your income. This can also help you build a professional landlord-tenant relationship throughout every tenancy.
Documents Landlords Should Keep on File
If you are unsure what documents you need as a landlord and why you need them, we’ve put together a list for you. Although not all of these documents seem necessary, it pays to be ready when the situation calls for it.
1. Lease Agreements
Be transparent about your rules and the consequences if they were not followed. Be transparent enough to include any rental limitations and restrictions in your written lease agreement.
Take the time to sit down with your renter and discuss each item and make sure to address any confusion. Keep a hard copy for you and give one to your tenant. Since it can easily be misplaced or lost, make sure to keep a digital copy - scanned or photographed. Keep several copies of the digital version by uploading it to the cloud and saving it on your computer or USB.
2. Inspection Checklists
As the owner, you need to know the condition of the property before and after a renter has moved out of your space. Before your walkthrough inspection, create a checklist of the things you need to look for inside the house. Take photographs and include notes so it’s easy to identify any changes made to the property during the tenancy.
This record will be handy when you need justification for keeping the security deposit. It will also be helpful for your contractors when fixing or conducting repairs in the rental.
3. Lease Amendments
During the tenancy period, there may be changes to the original lease agreement that both parties have agreed on. Document the amendments and attach them to the original lease agreement. Keep a scanned copy in the same folder where the original agreement was saved.
This type of document is only created in certain situations when tenants start to deviate from their responsibilities such as paying rent. When a notice has been sent out, always keep a copy of what you sent. Make sure that the date when it was sent is recorded, as well.
Reasons Landlords Should Keep Records
Rental property owners need to keep the paperwork so all parties have a reference and, in unfortunate situations, use it as proof when disputing anything related to the agreed terms and conditions.
It is difficult to prove something when it’s your word against theirs or when either party starts to play the blame game. In these cases, it is best that you have evidence or references. Make sure to process the paperwork and file it appropriately so you can easily access it when needed.
1. Reinforce Terms and Conditions
Keeping a record of the terms and conditions holds all parties accountable. Ensure that there are no stones unturned by giving your tenant a chance to raise their questions so you can respond to them respectfully. In situations when tenants become problematic, you can remind them by pointing out the item in the written agreement.
It’s easy to keep a professional landlord-tenant relationship when all parties know where their responsibilities start and end. With the document handy, you can reference specific sections in the agreement when the need arises.
2. Protect Against Litigation
The most common reason for landlord-tenant disputes is incorrectly charging the tenant or keeping the security deposit. That’s why it is crucial to conduct move-in and move-out inspections to keep track of new and existing damage.
Assess the overall condition of your rental space and take note of your findings. This documentation will help the court decide whether what your renter is disputing is correct or not.
Having a copy of the document signed by you and the renter would make it easy to say that the message is understood and acknowledged by all parties. Signing the presented document means that the tenant has been informed of the same point you are referring to.
3. Bookkeeping and Accounting
Another reason to file your documents properly is for you to keep track of your cash flow. All paperwork should include the date and clearly state the amount received or owed. It can help when collecting rent, tracking lease renewals, and even with your financial planning.
All receipts related to your rental business can help in keeping your books up to date. During tax season, your accountant will also thank you for keeping all of them organized and easily accessible.
4. Streamline Your Process
Being a rental property owner means having a process to follow and being consistent with it. From avoiding marketing mistakes and doing tenant screening up to signing the lease, you will be dealing with paperwork and it can be overwhelming.
Make sure to streamline your process by making a checklist and preparing all documents, even ones like an eviction notice that you don’t need yet. It is always better to keep the document and not need it than need it and not have it. Documentation can help you protect yourself, your rental property, and your revenue.
Managing paperwork and tenants at the same time can be too much to handle as a landlord. Here at Pinnacle Property Management, we can organize your documents, enforce the terms of the lease, take care of your tenants and more! Don’t let these responsibilities weigh on you and let us carry the burden. Contact us today!