The main common goal in real estate investing is to generate as much rental income as possible. And even if you are managing only one rental property, you need to make sure that the corresponding rent is being paid.

That’s why property owners use a rental ledger. It is a valuable reporting method that provides the landlord with insights about their property. It also will allow them to see through new opportunities to increase the property value, leading to a better cash flow on their business.

In this article, we will talk in detail about the rental ledger and how a property owner or landlord can use it to properly record their monthly rent payment.

Property managers and real estate investors use a rental ledger to check the payment status of each tenant of their corresponding rents without digging through receipts. Everything is laid out in a single document.

The rent ledger compiles key information such as monthly rent payments, when it was received, and how much was received. Property owners can also check if there is any late fee to be paid in their rents, along with the dates when tenants must deliver their next payment.

All businesses keep track of their income received and outstanding payments due to better managing their cash flow.

The income that rental properties generate is the main reason why people invest in rental real estate. A rent ledger will help you to keep detailed records of all the income received and all the receipts that are still open or outstanding. You must collect the monthly rental payments before you can pay the mortgage and any operating expenses.

Whenever you review the rent ledger, you will have a real-time overview of how much cash has come at any given time and how much income still needs to be collected. Based on the information the rent roll will provide, you can review your accounts to determine when you can pay any outstanding invoices to your vendors or deposit any remaining profit into your account bank.

You not only will be able to monitor your incoming cash flow and net operating income, but a rent ledger also serves as documentary evidence if you are going to begin an eviction process with a tenant due to the non-payment of rent. The rules to implement the eviction process over a tenant may vary from state to state, but the landlord must prove that the rent wasn't paid.

If you successfully evict a tenant, you can regain control of the property, make the needed repairs, define how much of the security deposit will be withheld to pay for all the damages, and quickly turn the property over to another more qualified tenant.

As we already discussed, a property owner's main benefit from having a tenant ledger is a consistent record of their rental income flow, how much the property generates, and a complete payment history available.

Yet, a payment ledger comes with several other benefits for the owner.

Better Financial Records

A rental ledger template can be used as a balance sheet. The property owner can edit it and add more fields to indicate the amount spent for repairs, paying the caretaker, and other miscellaneous expenses.

If the property was built on a mortgage, you could add a column showing mortgage payments. Using such methods, a property owner can determine how long it will take to recover the construction cost.

Additionally, you can use rental ledgers whenever you need to ask for loans. Lenders will ask for records showing a borrower if it can manage a loan before approval.

Then, the landlord can use the lease ledger to prove they have a regular income. If they have kept the rent ledger for some time, it can be used as a legitimate support document.

Adds Value to The Property

Maybe you will decide to sell the property after some time. A rent ledger will give you a better negotiating opportunity.

Suppose your rental ledger shows that the property is full of tenants consistently paying rent. In that case, it will increase the property's value.

Also, many buyers will want that property immediately because it comes with a catch. They will be convinced that this rental unit will generate income right from the start.

Allows a Property Manager to Identify Opportunities

Without a tenant ledger, it would be rather difficult to identify opportunities your property might provide. A rent ledger answers such doubt by providing an overview of your property.

You might notice certain rental units didn't have a tenant for a while. Or rather, a unit is in high demand, mostly because of its prime location. This will allow you to make decisions accordingly, such as increasing the rent.

You might also notice irregular rental income patterns while the number of defaulting tenants is high. This will indicate that the agents doing the tenant screening process on your behalf aren't doing a great job.

Another common problem that could be spotted early on with a rent ledger is noticing tenants moving out too often or sooner than they should be. You can check how long a tenant occupied each unit. This could be an indication of underlying problems with the property. It will be time to improve your property to attract tenants that will stay there for much longer.

Your rent ledger must contain every important detail that will help to keep a record of rent payments. If any information is lacking, loopholes could be used against you in a court case.

If you aren't certain of which information your rental ledger must have, you can refer to any free rental ledger template available online (some of which you will get later in this article). You can use any rent ledger example as an inspiration document whenever you decide to make your own one.

Nonetheless, this document should include the following:

• Owner Name: The person who owns the rental property.

• Physical Address: The physical location where the rental property is. You should indicate the state, city, street, and area code to show exactly where it is located.

• Rental Property Type: A rental property may vary in size and structure. You need to indicate what the type of property it is. Some common examples are Vacation rental homes, Getaway rental homes, Condos, Single-family rental homes, Multifamily rental homes, Student rental homes, and Luxury rental homes.

• Property Zoning: Zoning means the local laws that regulate how a property can be used and provides restrictions for what it cannot be used for. These building and construction laws are applicable in specific geographic areas.

• Lot Size: It is the size of land occupied by the property in square feet.

• Unit Number: Each unit has a unique number (if you have multiple properties)

• Unit Size: It should be indicated in square feet.

• Number of Bedrooms and Bathrooms: Rental units are usually described by the number of bedrooms.

• Tenant’s Name: If a couple rents the unit, you should indicate who the person responsible for the payment is. If it is a family unit, indicate the name of the head of the family.

• Lease Start Date: When the tenant moves in.

• Lease End Date: The date when the rental lease expires. It will be subjected to renewal. The lease agreement can be terminated if the tenant fails to correct any unpaid rent.

• Rent Due Date: Set the rent payments received, their frequency (monthly, quarterly, semiannually, etc.), and the date the rent must be paid.

• Any Additional Payments: These could be appliances, pets, etc.

• Rent Paid Date: The day when the tenant paid their rent. It could be on the exact date, past the due date, or before.

• Deposit For Security: This deposit remains as security if the tenant defaults payment or damages the property.

• Notes: This field will contain any additional comments you want to record.

Everyone involved in the rent of property has used a rent ledger, which helps answer many important questions about the rental payment history for any of the parties.

Property Managers and Owners

Owners, property managers, lenders, and buyers use rent ledgers to report similarly. But their reason for using it may vary.

Whenever someone wants to sell a rental property, their main goal is to maximize the purchase price. One of the best ways to achieve it is to demonstrate that the rental property generates consistent rental income. By reviewing the rental ledger, property managers and owners can easily check for any tenants with past due rent, assess late fees, and notify with the total amount of the tenant's rent due.

If there are any leases due to expire within the next 90 days, the owner can contact the tenant for a lease renewal. Or if they disagree and don't plan to renew, the property can be pre-marketed on a rental listing website in advance, so the owner can minimize the amount of lost rental income in between tenant turns.

By comparing different reports, it will be easy to spot if any tenant is paying below-market rent. This might allow you to raise the rent when the lease comes up for renewal.

Lastly, a rent ledger will show the amount of security deposit held for each tenant and determine how much of the security deposit could be spent for the damages, if needed.

Lenders and Buyers

The biggest concern that lenders and buyers have is how much rental income a property will generate. When lenders decide how much financing they need to provide, they use the debt service coverage ratio (DSCR) as a financial metric. The DSCR is a ratio that compares the net operating income available for the property to the mortgage or debt payments.

For example, if a family rental home generates $18,000 in gross annual rental income and has operating expenses of $10,000 per year (excluding mortgage), the net operating income would be $8,000. If the annual debt service is $6,000, then the DSCR would be a little over 1.3.

Most lenders try to look for a DSCR of at least 1.20. In that case, the previous example generated enough net operating income to pay the mortgage. This formula allows buyers and lenders to check if the generated income will decline in the future or not.

Tenants

Tenants can use a rent ledger in their favor when applying for a new home to rent. By showing a copy of the rent ledger to their new landlord, they can demonstrate that they have a good rental payment history.

Tenants can also use the rental ledger to defend themselves in any dispute about rent payments or against unlawful eviction.

Now that you know everything related to rental ledgers, you are ready to make one of your own. Although one of the best ways you can start writing one is to download a free rent ledger template and draw inspiration from it (or simply modify it to fit your needs).

That's what we are going to provide you with. There are several templates below available to download, and the only thing that you need is to have Microsoft Excel and Word installed on your PC.

If you need a CD key for any of those programs, you can get one for a low price at the RoyalCDKeys store. There you will get the latest version of the Office package with Word, Excel, Outlook, Access, PowerPoint, and more.

Standard Rent Ledger Template

This template comes with some basic information like the tenant and landlord names, addresses, and IDs, followed by a long list of weeks to keep track of the tenant's rent. There are several columns to state rent dates and amounts, finishing with a second table that will act as a summary.

You can download it as an Excel spreadsheet from Examples.com.

Basic Rent Ledger Template

This template has all the necessary elements to create an effective rent ledger, as we stated previously in this article. From the contact information and property details to fields where you can state the security deposit and additional notes, with everything in between.

Download it for Excel from RoofStock.

Simple Rental Ledger Template

This template has a similar structure to the first template example but is summarized on one page. Below the basic contact information for the owner and the tenant, you will find two tables to state the income and expenses.

Download this template from iPropertyManagement.

Monthly Rent Ledger Template

If you are employing monthly rent payments for your property, this template is perfect for you. Below the basic tenant information, you will see a table divided by each month of the year, where you can state the due date, amount received, debt, any late fees, and additional comments you wish to include.

Download it as a Word document from TemplateLab.

Property Manager Rental Ledger Template

This template is perfect for any owner or property manager that wants to have a thorough report about their properties, their operating income and expenses, their security deposits, and how well they are performing.

Download it as an Excel spreadsheet from TemplateLab.

Rent ledgers will provide details of the rent paid by all the tenants that are in each property a real estate investor owns. The user will be able to tell at a glance if such rent was paid in time, if there are any past due rents, and if a late fee was assessed or not per the terms and conditions of the lease.

The rent ledger will also reveal new opportunities to increase your cash flow, return on investment, and property value. But, as we have discussed, it can be useful for buyers and tenants themselves.

Use any of the free templates available to make your own rental ledger and get all the benefits that rental ledgers have to offer for you, despite your position as a property owner, lender, or tenant.