One thing that anyone who has ever purchased property is certainly familiar with is all of the real estate investment paperwork that goes along with it – and this is especially the case if you own rental real estate that entails ongoing documentation such as incoming rent checks, maintenance records, insurance, and tax files.
Owning one property can produce its fair share of record keeping. Once you start to build up a portfolio of multiple properties or units, the paperwork can almost seem overwhelming – unless you have a system for keeping it all under control.
One way to do so is to develop a system of files or folders and dividing them into two distinct sections. These should include the following:
The property acquisition section should consist of detailed information about each individual property that you have purchased. Ideally, you should include photos of both the inside and outside of the property, as well as copies of the purchase contract.
Be sure to also include any of the counter offer paperwork, as well as the inspection report, if applicable. In addition, include details regarding any repairs that were made to the property, along with bids that were received from the contractors.
This section should also include information regarding “comps.” This is the details on recent sales of comparable properties in the area. If your property will be kept as a rental, be sure to also include information on comparable rental properties in the area as well.
The second section should include tax information. Not only will this be a good reference to you overall, but it will also be extremely helpful to you at tax time each year. This section of the file or folder should ideally include the following information:
- A simplified profit and loss statement (i.e., how much you have made and spent on the property each year)
- Copies of utility bills
- Invoices from repair work completed on the property
- Copies of the monthly mortgage statements
- Copy of the annual property tax receipt
- Copies of the property’s closing documents
- Copy of the mortgage interest statement
- Copies of the property management statements
While having this information can be helpful, using the services of a property management company can also provide you with a great deal of similar information – and free up a great deal of your time. For more information on how to get the most from your real estate investment, gather up your real estate investment paperwork and give us a call.