This 2018, I am handling 6 rental units as the starting point of my real estate career and I just realized that I have to get organized. I figured that I need to get my filing and tracking system in order. Since the goal is to have more than 35 rental property units within 5 years, setting my property management system now will save me from a lot of headaches and expensive mistakes in the future.
As I get organized, I discovered some good practices for tracking rental files that I am now practicing:
Keep Hardcopies in an Organized Filing System
I used to just put all documents and receipts in one file envelope for each property because I was too busy (okay, maybe a bit lazy) to set up a decent filing system. Although not very efficient, this simple habit was nevertheless a life-saver. When I decided to finally set up a better filing system last week, I got to back track and record the transaction history of some of my properties from past years. Now, I simply separate the files according to categories for each property such as Tenant Files, Deeds & Titles, Real Property Tax, Bills & Payments, Capex, Opex and other folders. This way, if I need to check on some account information, it will be faster to find and pull up the files.
Keep a summary log for your folders
To make things even more organized, I put a summary log sheet on the left side of the folder and note down all the documents that I file during the time of filing. This way, instead of rummaging through the fastened sheets trying to find a specific document, I can just look at the log sheet and know immediately what is in the folder. This is a great time-saver and I also use this even on 201 files and other folders of my training company.
Keep All Receipts and Warranties for paper trail
Every bill or receipt of products and services you get should be kept since these serve as your back up paper trail. Moreover, if an appliance breaks for fully furnished units, it may still be on warranty and you can save on repairs and maintenance costs. Be sure to photocopy receipts printed on thermal paper because these fade after a few months. Service centers will usually ask for a receipt to verify the warranty. I know this is a good practice but I must admit I am not as diligent. So I need to put in the extra effort to do this.
Record All Transactions manually and digitally
Aside from filing the papers, it is important to record all important transactions manually or digital. A simple notebook is an indispensable recording tool. Inputting transactions on excel can help you track, sort and automate computations. I think it helps to have both. I use an old-fashion notebook to jot down important transactions quickly and I update the excel file at least once a week. Then I make sure to back up the files because you never know what can happen to your digital files if a virus or worm attacks your computer. Better safe than sorry.
Keep Info Sheets, Forms and Document Templates on Hand
I get several inquiries on vacant properties. So I keep an information kit that I can email or viber to clients immediately. The property info sheet provides photos, map, rates and terms. I used this as a screening process to filter out serious clients before any viewing. If the client wants to proceed, the viewing is arranged and the Tenant Application form is filled and submitted which allows you to see the profile of the tenant. If a tenant is approved, I have a ready lease contract template that I send. I also have an acknowledgement receipt form to record the checks payment details. Having these documents on hand will fast-track the sales process and make life easier. (check out my rental toolkit here)
Keep an updated Real Estate Directory
Input contacts and back up your phone directory. The more updated and complete the information, the better. For easier tracking, categorize them under tenants (prospect or client), building administrators, brokers and suppliers (plumber, electricians, pest control, cleaners) etc. Keeping a directory of good contacts and service providers will save you from many landlord headaches.
Have a separate account specifically for real estate transactions
Never mix your personal finance from business finances. This discipline should be practiced from day one in any business. Opening a bank account is free, so get a separate bank account for all real estate transactions. This will literally allow you to separate your personal life and business life. I’ve seen some entrepreneurs who mix their family and business account. The family ends up using business funds as expendable cash thinking that it is their own personal bank. This almost always becomes disastrous which can break you business or worse, your family.
Set up your accounting system
Whether you use excel, quickbooks or other real estate accounting apps. It is important to set up you bookkeeping and accounting system which allows you to automatically pull up reports at any given time. I personally prefer excel cause it allows the user to manually see the whole system and set up customized formulas. But I am also looking for a cloud-based software that can help me automate important functions and give me alerts. If I finally find a software that suits my needs, part of the requirement is to export into excel file. This way, if I encounter any tech problems or worse, the service provider ceases to exist, I have my tried, tested and proven excel file.
Set up an automated scheduler
I rely heavily on my yahoo calendar which syncs quite well with my iPad. I use it to plan and schedule meetings, payments and communications. For a forgetful person like me, it is a god-send. I have yet to explore and check all of the functions it has, as well as the equally useful google calendar. The point is, we now have all of these technology available at our finger tips. So let us make the most out of it.
Find Ways to Automate using Apps or Cloud-based Systems
There are powerful property management tools available that allows you to automate your accounting, schedule, email communications, directory, service requests and more. I am still exploring and testing some of them because if I am going to spend time encoding all the data into a system, I want to make sure that the system works, the company will still exist through several decades and I can back up and open the back up file in excel at least.
Taking the time and effort to set up and manage real estate files is no joke. It requires commitment and effort. But it can be fun and therapeutic if you are a Konmari fan or a neat freak with a handy label maker. (I still use my handy old brother p touch label maker). Organizing your Real Estate files and records is essential if you want to scale up to more properties. Happy organizing!
Jhoanna Gan So is the co-founder and President of Businessmaker Academy and HR Club Philippines. She is a Property Investor and Licensed Real Estate Broker (REB PRC # 0029553). She devotes most of her time to business education, real estate and her amazing family.