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When it comes to managing rental property, data is key.
Whether that’s local market data that helps you price your units or insights into your growing maintenance costs, data can help you uncover issues and make informed decisions.
One of the most important pieces of data is rent, and everything related to it.
How many of your tenants are consistently paying late?
What is your total rental income?
These questions and more are some of the insights that a landlord ledger, or rental ledger, allow you to answer.
It’s a simple report, but an important one nonetheless that helps you track the single most important thing in your business: cash flow.
Below, we’ll dive deep into what a landlord ledger is, what information is included in a typical ledger report, and the benefits of using a rental ledger.
Plus, we’ll end it with a simple recommendation for getting easy access to your ledger and other reports.
What is a landlord ledger used for?
Similar to a property management chart of accounts that charts all financial activity, a rental ledger specifically charts rental payments by tenant.
The report collects a number of vital pieces of information, all related to rent payments.
That can include late fees paid and even those currently owed, making it a great report to run for getting a grasp on what is still owed if anyone is late.
In this way, it’s very similar to an accounts receivable report that another type of business might run to take stock of what they’re owed when running collections.
With a rental ledger, you’re able to stay on top of what you’re owed to maintain proper cash flow.
What information is included on a ledger?
The primary piece of information a rental ledger includes is rent payments and their corresponding date.
However, that’s not all.
You’ll also typically find:
- Property name
- Tenant name
- Monthly rent
- Due date
- Date that rent was actually paid
- And late fees incurred
- Security deposit amounts
- And more
A rental ledger is ultimately just a report, so it all depends on the program that the ledger is being run on.
However, these are the primary pieces of information you’ll find on a rental ledger
The benefits of a rental ledger
Now, let’s talk about why you should really care about running and using a landlord ledger report.
Why is using this report so important?
Here are a few of the most notable reasons:
1. Improve rental cash flow
That which you track you can improve, and that is as true here as anywhere else.
Being able to track all of your property and tenant rent payments together in one place is useful for improving cash flow because it can show you where there is room for improvement such as frequent late payments.
2. Further improve general financial performance and chances of obtaining a loan
Beyond just rent collection, having a clean rental ledger can help you in obtaining a loan for another rental property.
That’s because one of the main things a lender looks at is the accounts payable and how easily it can be paid off with what is owed in accounts receivable.
If you have a clean ledger with on-time rent payments and no overdue responsibilities, you’ll look way better to lenders.
3. Identify issues with a particular property
We touched on this a moment ago, but it’s worth highlighting.
A rental ledger can help identify issues with your cash flow, which you can follow through to individual properties to identify the source of the issue.
If a particular property seems to be having cash flow issues, it could mean that the property manager you’ve hired for that property or set of properties isn’t working out.
Alternatively, it might mean that rent collection or the method you’re using for giving tenants the ability to handle other responsibilities such as parking or pet rent is hard to use or insufficient in some other way.
4. Keep records of tenant rent payments for potential use
While not a fun topic to talk about, the importance of keeping detailed records is an important one.
If you enter a lawsuit with a previous tenant, having detailed records that allow you to show the tenant consistently dodged rent payments and paid late could be the key to proving your case.
So while documentation isn’t exciting, having a clear ledger that you can pull up dates for in something like a property management software tool can potentially save you down the line.
DoorLoop
A rental ledger is a simple document with a powerful purpose, allowing landlords to gain insights about their cash flow.
It goes without saying then that a report about the single most important thing in rental property investing– cash flow– would be important.
You can find out not only how much gross rental income the property is bringing in, but things like:
- Can I increase rental income?
- Who is paying rent on time and who is often late?
- When are my leases set to expire?
- Are late fees being charged and collected?
The more information you can get related to the cash flow of your property, the more you can improve the cash flow of the property as well.
If you’re looking for a simple and easy way to get access to robust reporting like a complete rental cash flow ledger report, check out DoorLoop’s complete suite of accounting and rent collection features.
Instead of constructing your own ledger or depending on QuickBooks reporting which will lump up properties and tenants into the same customer category, try a solution made for landlords.
You can run countless reports to track everything from rent payments to work orders.
Plus, get access to a complete chart of accounts so you can have eyes on everything all at once.
See what DoorLoop can do for you.
Downloadable accounting templates
Here are a few more great property accounting resources from the DoorLoop blog:
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