A rent ledger is a physical or digital document that landlords use to track rent payments they receive from their tenants. A rent ledger isn’t only used by landlords but also by property managers, tenants, and lenders.
What Information Do You Need on a Rent Ledger?
A basic rent ledger should consist of the following information:
- Name of tenant
- Name of the property owner
- Payment amounts and due and paid dates, with columns in which you can input data once payment is made
To get started quickly and easily, download our free rent ledger, which is populated with all the fields above for your convenience.
Why Use a Rent Ledger?
Basically, a rent ledger details the amount of rent paid and when by your tenant(s). A rent ledger is an effective way to quickly view the rent status of your tenant(s), meaning you can see, at-a-glance, any outstanding payments, along with any late fees levied and the date of the next expected payment. A rent ledger can also be used as a repository for other important information regarding the tenancy, so it acts as a one-stop shop for most of the information you may need in this regard.
1. As a Landlord
This tool’s most basic (yet invaluable) function is to give the landlord a real-time overview of rent status and whether any payments are outstanding from their tenants. Beyond this, a rent ledger is a great way to anticipate cash flow problems in advance and spot opportunities. For example, studying a rent ledger over many years could indicate where properties are consistently turning over less in rental income than expected. This could indicate a need for some property upgrades, which, once completed, could significantly improve this income and result in longer-term tenants. A ledger is an accurate way to assess whether the income generated by the rental property is going up or down (or staying stable) year on year to determine the profitability of an investment unit.
2. As a Tenant
Rent ledgers can be important to tenants, too. When a tenant is undergoing the screening process concerning renting a new property, being able to show the prospective new landlord their previous rent ledger, showing they made all their monthly payments on time, can make them a much more attractive proposition for the tenancy. It’s likely to speed up the approval process, too.
Similarly, where the tenant is in dispute with the landlord over the levying or a late fee, or the starting of an eviction process, the tenant can request access to the rent ledger to ensure that the payments they’ve made have been correctly recorded in this document.
3. As a Property Manager
Property managers use rent ledgers to see where tenants haven’t made their rent payment on time, enabling them to act through a reminder letter or the levying of a late payment fee. A rent ledger can also be used as a tool to minimize tenant turnover - by identifying leases that will end shortly, the property manager can make early contact with the affected tenants, offering to renew their lease. It’s also an effective means of identifying where a rent increase can be made by checking the current monthly rental cost of the property against average local market values.
Other Stakeholders that May Use a Rent Ledger
Lenders often use a rent ledger to determine whether to grant or deny an application for a loan relating to a rental property. The lender will assess the ledger to determine the average occupancy rate of the unit and the income it generates. In general, if the property generates a high enough net operating income to pay for everyday operating expenses and service the debt, with sufficient money left over each month after these things, the loan will be approved.
Alternatives to a Rent Ledger
If you like the sound of a rent ledger but would like a solution that also offers a range of advanced tools, consider deploying digital property management software. This type of software is typically designed to automate many of the tasks that landlords or property managers would otherwise need to manually complete, thereby saving time and money - and ensuring that no missed payments fall through the cracks.
Digital property management tools can also help to streamline communication between the landlord/property manager and tenant and make staying on top of maintenance requests and reporting tasks much easier. Some examples of softwares are:
DoorLoop: This comprehensive suite of tools can be used by landlords who rent out a single property or property managers responsible for overseeing hundreds of units. It features an accounting suite, tenant portal, Quickbook integrations, maintenance and leasing tools, and more.
Propertyware: This option incorporates a range of tools designed to automate the collection of rent payments, as well as those for ensuring smooth landlord-tenant communication. Propertyware also boasts a robust accounting suite, which makes budgeting and reporting a breeze.
Appfolio: Appfolio is able to automatically calculate and apply late fees and allows for Smart bill entry, unlike most other property management tools on the market right now. It also incorporates a tenant portal and, like the options above, provides solid accounting and reporting tools.
The Bottom Line
A rent ledger is a basic but invaluable tool that can be used by landlords and property managers to easily see where rent payments are outstanding, details of late fees levied, and much more. These ledgers are also useful for tenants as part of the screening process and are assessed by lenders to help make a decision on whether or not to approve a loan on a rental property. A rent ledger is a good way to identify longer-term trends in terms of an individual property or the wider market by looking at the collected data over a term of many years.
While property management software solutions are widely available, you’ll need to pay a fee to use most of them. Downloading our rent ledger template is an easy way to begin managing your leased properties more effectively - and it’s free!