A rent ledger (also called a lease ledger) is a document used to keep track of income, expenses, repairs, and other important information for a rental property or group of rental properties.
What a Rent Ledger Should Include
Rent Ledgers can contain a variety of information. Some landlords choose to use one ledger for all their rental properties while others prefer one ledger per property.
Regardless of the type of property, your rent ledger should include the following information:
- Type of entry – income or expense.
- Date item received or incurred.
- Amount of income received or expense paid.
- Outstanding balance, if any.
- Description. In this section you can provide specific details regarding repairs or whether rent was paid/received timely and in the full amount.
- Property address(es) and unit number(s).
- Owner/Landlord name.
- Tenant name.
The ledger should contain information to assist in keeping track of all of the expenses and income for properties the landlord is managing. It should also contain any other information that is helpful in managing the property. Here are some additional details it should include:
- Expenses. This can include entries for upcoming payments as well as payments made. Here are some examples of expenses you may have on a rent ledger:
- Property taxes
- Mortgage payments
- Homeowners association fees
- Miscellaneous expenses
- Due date. A consistent item on every landlord’s rent ledger should be the date the rent is due. This is especially important if you have multiple rental properties with due dates on different days of the month.
- Monthly rent payment. This column should list the base rent amount along with any recurring fees (e.g. pet fees).
- Total due. In addition to the base rent, you should have a column that contains the total amount due for that month which can include late fees and a tenant’s outstanding balance.
- Revenue received. This column will consist primarily of rent payments with real-time payment updates. When you maintain a rent ledger over time you will have a picture of the complete payment history of all of your rental units.
- Lease start and end date. This information will help you keep track of where a tenant is in their lease to plan for inspections and to determine whether or not you will be renewing a tenant’s lease.
- Security deposit. It’s important to know how much a tenant provided for their security deposit. This is necessary to know when returning a tenant’s deposit and making deductions from their security deposit for damages or repairs.
- Type of property (e.g., single-family, duplex, etc.)
- Lot size.
- Zoning or use.
- Square feet (of home or unit).
- Notes. This is a section for any important notes you want to make about a rental unit. This could include a reminder of when to send a notice to a tenant to renew their lease or when an appliance is due for replacement.
How to Fill out a Rent Ledger
Now that you know what to include in a rent ledger, you need to know how to fill one out. Take the following steps when filling out your rent ledger.
- Record entries immediately. As soon as an income or expense occurs, write it down immediately. Waiting to write an entry down can result in inputting the wrong information.
- Description. Provide detailed information on any action taken. For instance, with repairs, explain the details of the repair and the reason for the repair.
- Confirmation. Whether you are a landlord or tenant, it is good practice to have the other party initial or sign when you have non-routine entries in your rent ledger. For instance, if you are a tenant and you made a repair to the hot water heater, you should request that the landlord initial that entry. Written confirmation from the other party will help strengthen your case if there is a lawsuit over a disputed charge or payment.
Regardless of whether you are a tenant or landlord, keep copies of any supporting documentation such as invoices, check numbers, and bank statements.
How to Use a Completed Rent Ledger
A rent ledger can be used for various reasons and by different types of people. Whether you’re a landlord or tenant, it is important to know how they may be used.
A rent ledger can provide landlords with a lot of beneficial information to help maintain and manage a rental unit. This is especially true if you are managing multiple rental units. A landlord can use one to help manage the following tasks:
- Rent Payments. Staying on top of rent due dates and payments is a basic yet important task for landlords. A ledger can help a landlord manage these payments and make sure tenants are not missing payments.
- Outstanding Balances. They can also be used to check if there are any discrepancies or outstanding balances owed for any rental units. A landlord can then use that information to calculate late fees and, if necessary, send alate rent notice to the tenant.
- Lease Renewal Letter. A rent ledger will contain information on when a lease ends. The landlord can use this information to know when to send a lease renewal letter to a tenant to extend their lease.
- Lease Non-renewal Letter. Just as with the lease renewal letter, the rent ledger can remind a landlord to send a letter informing the tenant you will not be renewing their lease.
- Budget for future expenses. A landlord can look at the income coming into the property and plan for future expenses such as maintenance, repairs, and taxes.
- Overall planning purposes. A ledger can be used to evaluate expenses and identify trends for planning purposes. This can include planning for new tenants or major property updates.
- Documentation for a legal suit. Information contained in a rent ledger can be used as evidence to present if you are involved in a lawsuit.
- Security Deposit. After a move out inspection, it can be used to determine how much of the security deposit to return to the tenant and whether any portion of it will be used to pay for damages.
In some cases, the owner is also the landlord. However, a rent ledger has specific uses for a property owner. These include:
- Preparing tax filings. The IRS requires property owners to substantiate certain rental property deductions. The ledger can provide evidence of repairs or expenses you claimed on your tax return. This documentation will be important if you are being audited by the IRS.
- Generating Income. Property owners can use the ledger’s information to improve a property’s financial performance and identify opportunities to increase its value.
- Tracking cash flow. A rent ledger, over time, can show if the income received is growing or declining. It can also show whether a property is being well maintained and what is causing periods of vacancy. An owner can evaluate this information and make property improvements or hire a new landlord to attract better tenants willing to pay a higher monthly rent.
- Long-term Property Trends. Having a rent ledger for several years can help you identify important trends. It could be that a certain property generates higher rents than other similar properties due to its location or upkeep. Or it could show that one unit in a multi-family building generates less rent than other identical rental units. This could be a sign that there are appliances or cosmetic updates that need to be performed.
Tenants use a completed rent ledger for the following reasons:
- Proof of Payment. The ledger can show proof of the amount of rent paid and when it was paid.
- Documentation of repairs made. If you make repairs as a tenant you want to make sure this is well documented. This is especially important when a tenant withholds rent for repairs they made. This will also be important information if a landlord attempts to evict a tenant from their rental property for withholding rent due to repairs made.
- Security Deposit. A rent ledger can provide a record of the amount a tenant provided to the landlord for a security deposit.
A tenant can also ask a landlord for a copy of their rent ledger. This could be used to show future landlords that you were timely in making your rent payments. This could provide tenants an advantage over other potential tenants and may also speed up the approval process.
While buyers and lenders do not prepare ledgers, they are an important tool for them when determining whether to buy a property or provide a loan to a property owner. At a very basic level, buyers and lenders can use them to review a properties
- Net income
- Vacancy level
A buyer can use this information to determine whether or not a property is a good investment and can also help them negotiate a better price. For lenders, it can provide them the information they need to ensure they are underwriting a property that is in good standing and has had a profitable history.
Benefits of a Rent Ledger
For landlords, there are several benefits, especially if they are handling multiple properties or units at once. The more properties or units a landlord is managing the harder it is to keep track of everything and the more likely mistakes will be made. Having a rent ledger provides the following benefits:
- Keeps a landlord organized.
- Ensure tenants have timely paid rent.
- Provides proof of non-payment of rent if a landlord needs to evict a tenant.
- Provides proof of repairs and their cost. This is especially important if a landlord needs to withhold a tenant’s security deposit or dispute a tenant’s claim for withholding rent.
- Determine whether or not a rental property is profitable.
- Make timely repairs and maintenance.
A rent ledger can benefit the tenant in the following ways:
- Provides supporting proof of rent payments. This is important if a tenant believes they are being unjustly evicted by a landlord.
- Documents when you made repairs and how much those repairs were for. This is an important item to keep track of when withholding rent for repairs.
Questions a Rent Ledger Answers
Here are 10 questions a rent ledger answers:
- Are late fees being properly applied to tenants late on their rent payments?
- Are rent payments being properly recorded?
- What is a tenant’s rent payment history?
- How long has a tenant occupied the property?
- Which leases are due to expire and when?
- Is the landlord managing the property well?
- How much income is the property generating?
- Will the future rental income increase, decrease, or remain the same?
- Are there repairs or improvements that should be made on the property?
- Is a tenant’s security deposit enough to cover damages to their unit?
Actions based on Rent Ledger Information
Armed with all of this information, what actions might a landlord take?
- Improvements. If you notice that you have repaired the same item three times over the past year, it might be time to replace a particular item.
- Evictions. If a tenant continues to fall behind on rent it may be time to consider beginning the eviction process. A rent ledger can be used to prove missed payments. However, make sure that it is current and is being updated regularly. For additional information, please review our resources on the eviction process and your state’s specific requirements.
- Increase Rent. It may be time to increase a tenant’s rent. A landlord or property owner can use the rent ledger to check on the tenant’s monthly rent and compare it with the current fair market value of rent paid in the area. When making rent increases, just be aware of your state’s rent control laws.
Sell Property. A rent ledger may show that a particular rental property has excessively high costs. As a property owner, you may ultimately determine that the property is not profitable as a rental unit and decide to sell it.