A rent roll is a simple concept that sometimes is misunderstood, but landlords need to realize the benefits that using one regularly can have on their business. Why are rent rolls so easily misunderstood? Because the roll can have different applications depending on who is requesting the rent roll.
What landlords need to know is that having a rent roll document on file will provide a snapshot of a rental portfolio to give a bird’s eye view of an investment. When you have accurate numbers accumulated in your rent roll, you can be confident in your investment to profit ratios.
By filling in a rent roll template, you’ll have quick access to important information on your portfolio. Here’s what you need to know to make this happen!
A Table of Contents For What a Rent Roll Is:
- What is a Rent Roll?
- Rent Roll Template
- What Does a Rent Roll Look Like?
- Sample Rent Roll Report
- How to Create a Rent Roll in Excel
- Rent Roll FAQs
What is a Rent Roll?
A rent roll is a document that lists all the rentals in a specified portfolio. This list could be for a single apartment complex or the entire rental portfolio of an investor.
Why does a landlord or real estate investor benefit from using a rent roll?
The purpose of the rent roll is to provide a quick snapshot of expected rental incomes along with important aspects of the lease highlighted for each rental unit. Having such a document is helpful for an investor to have a summary of their portfolio or for a lender to see an overview of a proposed purchase.
The average lease is typically longer than 10 pages. If someone wants to see a financial overview of your rental portfolio, they don’t want to see 10 leases (100+ pages); they would rather want to see a rent roll document that pulls the financials together in one place.
When you create a clear rent roll that has all of the information that you could want to reference in a quick moment, you’ll be making a wonderful reference document for yourself and for anyone you want to show the profitability of your company to.
A good rent roll will be both easy to update and easy to understand. By ensuring that your rent roll has both of these things, you’ll ensure that you have a good financial plan for your future.
Rent Roll Template
Because it can be hard to understand what you need to put into a document that is unfamiliar such as a rent roll, we’ve put together some documents that you can help you. After all, not every investor is the same and, therefore, there could be a couple different rent roll templates depending on your portfolio.
Each of the dropbox links below will open a downloadable excel file for each type of rent roll form:
- Rent roll template excel for an apartment complex
- Rent roll template excel for an entire rental portfolio
The only difference between the two forms is that the rental portfolio provides a column for each rental’s address. While this is a small difference, having both templates available can make a huge difference in how you organize your financial portfolio.
If you’re looking to sell an apartment complex, you may want to put together a rent roll just using the first link, whereas an investor might want to use the second link to see a snapshot of their entire portfolio.
How To Update Your Rent Roll
It might be a good idea to update the rent roll each year at the same time, but in reality, you should do your best to update the rent roll anytime that you make significant changes to the information that you track on this record.
If you renew a lease with a tenant or increase rent, make that change to the roll as soon as possible. Is a tenant moving out early so you won’t be making a profit for a short period? It’s time for another update.
Updating your rent roll report frequently will give you easy access to an up-to-date document, which can help to organize and solidify your investment(s).
What Does a Rent Roll Look Like?
Here’s a screenshot of the rent roll report template for an entire portfolio.
The main components of the rent roll report are as follows:
- Address
- Unit
- Unit type
- Square footage
- Lease start/end date
- Current rent
- Annual increases
- Tenant expenses
- Bonus remarks
All of these components are important to include for their own reasons. Some of the information, such as the unit type and address, are simply identifiers to keep your records organized. Others, such as the annual increases, are important so that you can keep your growth plan updated and on track throughout your investment management career.
In the downloadable documents above, there are additional comments inserted that you can see when hovering over the individual cells.
Sample Rent Roll Report
Here’s a screenshot of a sample rent roll template filled out for an apartment complex.
Excel formulas have been added to this report for G22, G23, G24, and those formulas can be incredibly helpful for long-term management by landlords:
- G22: Total monthly rent: We added the following formula “=SUM(G11:G20)” as column G is the “Current Rent”
- G23: Yearly Rent: We added the following formula “=G22*12”, which takes our yearly rent and multiplies it by 12.
- G24: Average monthly rent: We added this formula “=G22/10”, which takes our 10 units and divides the total monthly rent by the number of units.
By having this data on hand at all times, we can quickly analyze the property and see which units are underperforming and what the potential lift in rental income could be with a remodel.
This is a handy tool for analyzing your rentals before a remodel because you can see where there is additional room to grow.
In particular, you can easily compare this roll sheet to the market rates in the area to decide if you can do a rental increase to match those rates. In some cases, a remodel will have to happen first, but it’s still good information to have on hand.
How to Create a Rent Roll in Excel
We already have copies of the rent roll templates above that you can use as a base for your very own rent roll. Of course, you’ll want to add formulas to your completed report to get the data you desire.
Here’s a quick screen capture video showing you some tips to help you tailor your excel file:
As a landlord, it is important to learn how to adjust templates like this to fit your specific needs. Do you live in a rent controlled area? Include the limit in your rent roll. Do you plan to do a rental increase at a specific date? Include that information as well.
Any key information that will affect your overall profit margin should be cleanly worked into your rent roll. While it might take time to accomplish that, having this report on hand will ensure the safety of your bottom line better than ever before.
Rent Roll FAQs
Because the rent roll report is not familiar to all landlords, you might have a few additional questions beyond what a rent roll is, how to best use it, and why you should use one at all.
Now that you know the answer to what is a rent roll report, we’ve gathered up some more answers so that you can have a full understanding of rent rolls today.
How Does a Rent Roll Differ From a Lease Ledger?
A rent roll is more of a snapshot of the rent financials that gives you the main particulars of a rental property without going into all of the details.
A lease ledger (sometimes referred to as a rental ledger) may include a full synopsis of financials, which includes the mortgage, utilities, and final net income of the rental. A lease ledger dives into the financials further than a rent roll.
The purpose of the rent roll is to provide an overview whereas a lease ledger gives more specific data about the property and where that financial overview is built up from.
Does a Rent Roll for Commercial Real Estate Differ?
A rent roll for commercial real estate or residential will be the same because you’re providing a general overview of the property. You will want to notate that the property is residential or commercial for your records.
The main difference between the two will be what type of data you choose to include and how you present it. Many times a commercial lease may have longer terms included as well.
Should Tenants Create a Rent Roll?
Typically, tenants do not see or have access to the rent roll report. This is a report for investment purposes, though there may be cases where you decide to share the information.
However, it’s a good idea for tenants to create a rental ledger that tracks their rent payments. This would include the month, payment date, rent amount, and any notes the tenant would want to write. This is helpful if there any disputes about rent owed to their landlords.
Buying a Rent Roll
There are cases where a property manager is reorganizing their business or getting out of the business altogether. Sometimes, the manager will sell off their rent roll. Of course, this report will have more details, but you can use the rent roll as the base to understand what you might be buying.
In these cases, you won’t have the opportunity to choose your own tenants because they might already be inhabiting the property, but if you pay close attention to the other financials, you could make a huge profit.
Using the Power of Rent Rolls
While some people see the rent roll report as an unnecessary document that they already have all the information for, these landlords do not see the beneficial nature of a streamlined and concise investment document like this one.
It is not always worth your time to dig out leases or to try to recall specific, important details about your properties. Having a rent roll prepared makes it very easy to find this information when you need it.
Take the time to prepare a rent roll today so that you can use it to improve your profits, bottom line, and overall profit margin in the near future!