What Is A Rent Roll & Why Is It Important To Real Estate Investors?

Whether you are new to the field or an experienced landlord, having access to accurate data about your rental property and tenants is crucial. From tracking collected rent to managing overdue payments, these details are significant for informed decision-making and ensuring your investment’s success. 

Managing numerous documents can be overwhelming, but a rent roll form simplifies this process by consolidating important property and tenant information into a single, user-friendly document. Save yourself time and effort by exploring the benefits of this invaluable tool. 

What Is a Rent Roll? 

A rent roll is a real estate document that helps property owners/ landlords keep track of the rent received and rent pending from each tenant. It also has important information about the residents and helps the investors calculate the amount of rental income that they have coming in from multiple properties or multiple units within the same property. Professional property management experts and engaged property investors use information from the rent roll to calculate the net operating income, cap rate, gross rent multiplier, internal rate of return, etc. 

How Does a Rent Roll Work? 

A rent roll efficiently organizes the total rent amount for an entire property. This document compiles information from lease agreements, covering one property or a complete portfolio of rental units. Instead of gathering information from various sources, landlords and property owners can use the rent roll form as a one-stop shop for all that data. 

You can easily keep track of rent payments and late fees. Set up automated rent payment reminders and late fees, and let your tenants pay using various methods. 

Why Is a Rent Roll Important? 

A rent roll form is essential as it provides historical evidence of your tenants’ rental habits and reliability. For example, you can identify tenants who consistently pay their rent late (or not at all) and use that information to promptly address the issue by sending out a warning notice or filing an eviction. Maintaining a record of this financial information ensures you can meet the daily operational needs of your property, from scheduling critical repairs to performing building maintenance. Efficiently managing your rental property is key to a financially thriving business as a landlord or property owner. This document enables you to make more informed and timely decisions, enhancing profitability. 

Your rental property is an investment meant to deliver steady income. A rent roll gives you an up-to-date view of your property’s cash flow. It helps you easily see whether your rental income is expected to rise, fall, or stay the same, making it a valuable tool for understanding and managing this crucial financial information. 

Who Uses a Rent Roll? 

Many individuals and companies benefit from using and reviewing rent rolls. This includes: 

1. Real Estate Investors & Landlords 
2. Property Managers 
3. A Prospective Buyer 
4. Mortgage Brokers, Lenders and Banks 

How Do Buyers Use a Rent Roll? 

Buyers and sellers gain significant advantages from a rent roll as it enables them to evaluate the gross rental income generated by a property. By comparing the tenant’s rent with the fair market rent value, you can identify opportunities to increase the rental value by raising the rental dues. Buyers often invest more in a rental property when they see its potential for producing a consistent rental income stream. 

How Do Landlords Use a Rent Roll? 

A rent roll provides immediate insights into a tenant’s reputation, helping you anticipate potential issues. For example, if a tenant starts paying late, it may indicate a recurring problem. By using the rent roll to guide your decisions, you can take proactive steps such as evicting the tenant, promptly pre-marketing the property, making necessary repairs, and reducing vacancy times. 

How Do Lenders and Tax Collectors Use a Rent Roll? 

Lenders and tax collectors actively use rent rolls to assess a property’s income potential. When a rent roll demonstrates a consistent history of generating steady rental income, lenders are more inclined to approve loans. Conversely, high vacancy rates or frequent turnover can deter lending decisions. 

Tax collectors rely on rent rolls to verify that property owners are complying with local tax regulations. 

Rent Roll Example 

What is a rent roll form and what is it made up of, you ask? Well, depending on what information you want and how much of it you want to keep track of, a rent roll can have several different components. The following list covers the elements of a rent roll form: 

• Name of property owner or property management firm 
• Property address listed on the lease agreement and tax forums 
• Type of property – for example commercial, multi-family unit, etc. 
• The square footage of the unit 
• Number of beds and baths  
• Additional features – for example, garage, storage shed, accessory dwelling unit, etc. 
• Name of tenant 
• Monthly rent amount 
• Lease start date 
• Lease end date 
• Security deposit amount collected by the landlord 
• Rent due date 
• Rent paid date 
• Additional tenant expenses – for example, residents will be responsible for paying for utilities or building maintenance charges, etc. 
• Total monthly rent collected from all units 
• Total annual rent collected

When Should I Use a Rent Roll? 

A rent roll offers numerous benefits. Here are a few key instances where using a rent roll enhances the management of your rental property: 

1. Rent Growth: By comparing monthly records year-over-year, you can easily see if the property’s rental income is increasing, decreasing, or staying the same (and by how much). 
2. Tenant Renewals and Turnovers: Ideally, you want a low turnover rate, as a 100% turnover rate means all tenants change year-over-year or before the year ends. This leads to more vacancy periods and reduced cash flow. By analyzing this data, you can implement effective solutions such as enhancing property management, maintenance, and upgrade efforts. 
3. Rent Paid on Time: Reviewing the rent roll to check how often you receive payments on time helps you assess the quality of your tenants and the property management firm. This information can guide your decisions on whether to renew a tenant’s lease agreement. 
4. Late Fee Income: As a landlord or property owner, you can categorize late fees as “found income” or an additional source of rental revenue. The rent roll provides this data, helping you determine what percentage of a tenant’s monthly rent equals the late fee cost. 
5. Evictions: If the rent roll shows frequent tenant changes, understanding the reasons, whether voluntary or due to eviction, is beneficial. For evictions, knowing the associated repair and legal fees can help you manage costs before renting out the property to a new tenant. 

Where to Find Rent Roll Data for Analysis 

You can gather data for your rent roll from various sources, such as: 

1. Your tenant’s lease agreement 
2. Your tenant’s file 
3. A county tax assessor 
4. A Multiple Listing Service (MLS) 
5. An appraisal report 
6. A profit and loss statement (P&L) 

A rent roll offers a comprehensive overview of your property’s past, present, and future income potential. 

Benefits of Rent Roll to Commercial and Residential Real Estate Investors 

1. It allows real estate investors as well as property managers to quickly and easily view rents due, lease terms, late fees, default payees, etc. 
2. Rent roll provides a bird’s eye view of all the historical income and expenditure. 
3. It helps with calculating revenue and growth. An investor or property manager can compare the current month’s income with the previous year’s income to gauge the rental unit’s growth. 
4. A rent roll helps with keeping a tab on evictions, their reasons, and the legal costs incurred due to them. 
5. It helps the investor or manager to understand whether the current rental rate is at par with the current market value of the rental unit.   
6. A rent roll helps prospective investors understand the current and future cash flow.  
7. Commercial property management firms and investors can benefit from a rent roll since it gives a clear picture of the financial performance of the properties.    

Maximize Your Properties’ Earning Potential with BFPM Experts 

A comprehensive rent roll offers property owners, managers, buyers, investors, lenders, and appraisers an up-to-date overview of the total rental income from each tenant. Real estate investors can compile individual property rent rolls and aggregate them to create a portfolio-level overview. 

A deep analysis of a rent roll can provide you with potential rental income, tenant concentrations, late fee inflows, property vacancy, and tenant turnovers & renewals. If you need help with getting your rental properties professionally and efficiently managed, feel free to book a 15-minute consultation call with our property management expert.