Rent rolls are among the most important reports in many real estate businesses. They serve as a critical-management tool for ongoing rental operations. For someone who intends to sell one of their rental properties, rent-roll reports also provide substantive evidence of the property’s value for prospective buyers.
Unfortunately, many organizations find it challenging to assemble this information quickly and easily. The out-of-the-box reports that come with leading real estate management software often fall short of providing the level of detail or desired presentation needed for rent-roll reports. Assembling custom reports can be a tedious and error-prone process, slowing down the flow of information and wasting valuable staff time.
What is a Rent Roll?
Conceptually, a rent roll is fairly easy to describe: it is simply a register of rents for a particular property or group of properties. It lists the various rental units and their attributes, the amount of rent charged for each of them, other related income and fees, and more. Here’s an overview of information that is typically included in a rent roll:
Unit designation: This is the basic identifying information for each distinct floor rental unit. It may include an address or building identifier, a floor and unit number, or any other information that uniquely identifies it relative to other rental units.
Unit type: For each unit, the “type” indicates whether it is a residential apartment, retail space, office or industrial space, storage unit, or other designation. The property manager will typically define these categories so that information is organized in a meaningful way for the business. Some property managers may wish to categorize units according to desirable attributes such as “ocean view” or “with balcony.” For storage units, there may be different designations for climate-controlled units vs. those without climate control. The trick is to provide enough detail to make the designation meaningful, without going into so much detail that these designations become unmanageable.
Size: Typically, each unit’s size will be designated in terms of area (e.g., square footage in the US). In some applications, such as with self-storage units, for example, sizes may be defined along simpler lines such as “small, medium, and large.”
Name(s) of the current tenants or occupants.
Lease terms and key dates: This should include the term of the current lease, as well as move-in date and lease-expiration date.
Deposits: You should record the amount of the current security deposit, as well as any other deposits or prepaid expenses. If you require the tenant to pay the last month’s rent when they move in (and subsequently hold it on deposit), that should appear on the rent-roll report as well.
Rent amount and other income or fees: Typically expressed as a monthly amount. If you include prorated utilities, taxes, or other occupancy expenses, those should appear on the rent roll as well, as a separate item. If a tenant pays for parking, club access, or similar services, you should also include that in the report.
Amount due and payment status: The rent roll should also include the amount currently due, and information as to the status of the tenant’s account. If a tenant is in arrears, the rent roll must reflect that fact and show the extent of the problem (i.e., by reflecting a total amount due and the number of days that the payment is overdue).
Why is a Rent Roll Important?
There are several different purposes for the rent-roll report, all of which are vitally important. First and foremost, it is a management tool. It provides a clear view to the state of the business, including vacancy rates, total monthly income, and past-due rents. The rent roll provides one of the quickest and clearest answers to the question “How is the business doing?”
From a slightly more strategic point of view, a rent roll can provide business managers with better insights into pricing. This is particularly true if the organization manages multiple properties and can use rent-roll reports as a basis for comparison across those multiple properties. Is rent for a particular unit above what the market will command, below, or is it just right? Rent rolls can help to answer those kinds of questions.
Finally, the rent roll is critical for buyers and sellers. If you’re selling a property–or even if you plan to do so in the future–having an accurate and well-organized rent roll can help you market your property. Prospective buyers will want to know that the property has a history of producing income reliably over the years. Accurate rent rolls help to make the property marketable because they provide supporting evidence of the buyer’s potential return on investment.
Common Challenges When Creating Rent-Roll Reports
Creating a rent roll can be challenging because many of the existing software systems such as MRI and Yardi come with off-the-shelf reports that are rigidly defined and difficult to modify to suit your needs. Although you can modify them, they usually require a high level of specialized technical expertise. If you don’t have the right skill set among your in-house staff, you could end up paying high consulting fees every time you need a modification. To make matters worse, that dependency introduces additional delays, slowing down the flow of information in your business.
The reporting challenge gets significantly worse if you need to include data in your report that come from other software systems (for instance, if you need to merge data pertaining to billing or credit card transactions, or integrate information from CRM, standalone asset maintenance software, or from an ERP system).
If you can manage to get all of those data into a single report, you’ll want to be able to drill down to subledger transactions to view details, research issues, and resolve variances. Most off-the-shelf software packages don’t provide sufficient drill-down capabilities to make them truly efficient and informative.
Although stock reports from your existing systems may not address these kinds of challenges head-on, there are ways to work smarter, not harder. At insightsoftware, we understand the needs of real estate companies. We have developed software that delivers the majority of the report layouts you need, starting from day one.
Our purpose-built reporting tools are pre-integrated with MRI, Yardi, and over 140 other software systems. They support quick ad hoc report design, and are made so that everyone in the office can have the power and flexibility to build the exact reports they need, without a power user or IT expert getting involved.
If your organization is struggling with rent rolls, or with any other kind of financial or operational reporting, give us a call. We’d love to talk about your project. Contact us to schedule a free demo today.