A Rent Roll Report (or Rent Roll Summary) is a document that lists paid rent and lease details for your property. Your report will list all the tenants with an active lease or rental agreement, any past-due rent, late fees, and other charges. It’s important to review this report to make sure you are receiving all payments owed.
In this post, we'll explain how to understand what a Rent Roll Report means for your property and help you troubleshoot any discrepancies.
What's Included on the Rent Roll?
Determining exactly what information should be included on the rent roll is a common challenge for landlords. Different rental properties have different tenant characteristics, landlord responsibilities, and lease terms. A good rule of thumb is to include all the relevant data.
The two most common data sets that should be included on your rent roll are:
The tenant’s name and address
The amount of rent owed
Some rental properties allow you to enter additional information that's relevant to the property and the tenant. For example, some properties require a "bond" deposit, and some landlords may include a pet deposit or security deposit in their rent rolls. Other landlords may include fees or fines that are not directly related to the lease but necessary for your property management company to meet requirements imposed by government agencies like the Tax Collector's Office. You should only include additional information on your report if it is clearly relevant to the lease terms and your business operations.
A "penalty" refers to any additional fee charged by your property management company to cover the costs of enforcing lease violations. An example of a penalty could be a $25 fee to evict a tenant for rent non-payment. Penalties are not considered "rent", and as such, should be listed separately from the tenants rental amount.
Unpaid Rent and Other Charges on Your Rent Roll
You can use your rent roll report in two ways:
To collect overdue rent payments, or...
To provide billing information for charges that are not included in the lease terms (such as late fees, pet deposits, or penalties).
Landlords using their rent roll report to collect overdue payments may want to include additional information such as:
The date each tenant is supposed to pay rent and the frequency of the payments (monthly, weekly, etc.)
Late fees or penalties for overdue rent. These can be calculated based on the amount in arrears or on a percentage of the total lease term. For example, if you have an 8-month lease and your tenant is behind by one month of payments, she would owe 8% of her total rent in late fees (8% x her monthly rent = $80).
The total amount owed in arrears, including late fees and penalties.
The Rent Roll as a Financial Report
Your rental property's rent roll report is like a financial statement that lists your property's primary source of income and all expenses—its expenses are based on the number of tenants you have identified during your calculation of net operating income or NOM. However, it does not list all your expenses, only those expenses directly related to properties or maintenance practices.
When preparing this financial report for a reporting period, consider the following questions:
Is the rent roll report being prepared for a specific time period (such as at the end of each month) or is it being prepared on an annual basis?
Will the information displayed in the rent roll report remain consistent next month?
What is your property's net operating income? NOM is defined as gross rental income minus vacancy and bad debt losses, divided by the total number of units.
What additional charges would appear in a traditional financial statement (like depreciation and amortization expenses)? These items should be included but carefully explained when preparing your annual rent roll report for tax purposes.
Preparing and Submitting Your Rent Roll Report
In the United States, your goal as a landlord is to make sure you're collecting all of the income that you're owed. First, you must understand the revenue and expense reporting requirements of your jurisdiction. In most cases, you will be required to report income and expenses in a 12-month period that coincides with your fiscal year. In other words, if you start your fiscal year on January 1, the latest date for submitting financial data will be December 31 of the same year. Typically there is an incentive for reporting early: it may take some time to collect all the information required for submission of your reports.
Calculating the information that should be included in your rent roll report is quite simple. If you're using income and expense reports to track your business operations, it will be easy to generate a monthly or annual report that includes all income and expenses associated with your property. In addition to tracking your business operations, you may want to consider using an accounting software program like QuickBooks® to manage these reports. The ability of these programs to track business operations closely can help you make better decisions about how best to move forward with rentals—from what services are provided, who will provide them, and how much they'll cost. These programs also provide calculators that can help you calculate financial statements that are useful for preparing and submitting your annual rent roll report.
The critical information required to prepare a good rent roll report depends on the type of property you manage. Some landlords may choose to use their rent roll report only to track their business operations, while others may include additional information, such as assets and liabilities, to comply with reporting requirements. Whatever preparation you use, make sure it meets all relevant laws and regulations—and check with your accountant or CPA before finalizing the report or budget to make sure it is accurate.
Most rental property owners use an annual rent roll report to track their rental activity and expenses. However, this approach is not required in every state. In fact, some states do not require you to track your expenses at all—you can simply submit a statement of income. In addition, if you are preparing your rent roll report for tax purposes (e.g., IRS Form 1098), it must be prepared and submitted correctly in order for the IRS to correctly calculate your net operating income and report it on your federal tax return.
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