What is a Rent Roll?

How do you track income by unit? Do you know when your leases expire or how much revenue each income stream generates? If not, creating a rent roll for your real estate properties might be the solution you’ve been searching for.

Rent rolls break down important information about your properties, including lease expiration dates, tenants, monthly rent amounts, and more. These insights can help you scale your portfolio and implement strong financial management practices.

In this article, we’ll cover the basics of rent rolls, including their importance, common information included, how to calculate a rent roll, and the different use cases.

What is a Rent Roll?

A rent roll is a document that reports data for each income-producing property. A property’s rent roll gives you important details about each unit, including the lease term, current income, the security deposit held, tenant names, and payment dates. This information is used by buyers, property management companies, property owners, and lenders to evaluate the financial health of your rental property.

Rent roll data can be used for different real estate property types, from multifamily and individual properties to retail and office spaces. Many rental property investors choose to have consolidated rent rolls for groups of single-family rental homes to keep data consistent.

Why Do You Need a Rent Roll?

Rent rolls are important for every real estate portfolio. After all, one of the main goals of being a property owner is to generate income. With accurate data, you can expand your financial management and analysis abilities, making informed decisions about current rents, cash flow, property values, and overall lease management.

Rent rolls are used by more than just property owners. In fact, if you plan on refinancing or selling the property, purchasing another property, or onboarding a new property management company, they will likely request a rent roll. We’ll touch more on how each involved party uses rent rolls later on.

What Information is Included in a Rent Roll?

A rent roll shows all relevant information by unit number. Let’s go through the main components found on a rental property’s rent roll:

• Property Information – Basic details about the property will be included in your rent roll report, including the property type, property manager’s contact information, and details about the property owner. The address and number of units might also be listed on your property’s rent roll.
• Unit Information – Specific information related to each unit will be found on your rent roll, including the square footage and number of bedrooms and bathrooms.
• Tenant Information – Current tenant information will be included on your rent roll, including contact details and names of each person.
• Lease Information – Key details about your lease will be listed, including the lease term, lease start date, lease end date, monthly rent amount, security deposit amount, and any additional rent.
• Rental Income – All details about rental income will be found on your rent roll, including how much income tenants have paid each month, rent control details, differences between market rates, expected rent increases, and late fees collected. Any important information about gross rental income will be listed on your rent roll.

It’s important to note that rent rolls focus on rental income, not expenses. Expenses, like mortgage payments, taxes, and insurance, are generally tracked on the profit and loss statement. Property management companies will generally provide detailed reports alongside your rent roll report to give you a full overview of your property.

How is a Rent Roll Calculated?

Rent roll is calculated by adding up all of the rental income derived during a specific time period, such as one month. Here is a four-step process for calculating rent roll:

1. Identify Rental Units – First, list each rental unit in the property.
2. Determine Rent by Unit – Next, list the monthly rent next to each unit. Also, list additional fees, late rent payments, and any other applicable information.
3. Add Monthly Rent – Now, add up all of the monthly rent collected. For more insights, you can break down how you collect rent, such as by cash, check, or electronically.
4. Annualize – If you are looking to see the annual amount of rent you can expect to collect, take your monthly rent and multiply it by 12.

Let’s say that you have four leases. Below is a sample rent roll. Remember, the level of detail on your rent roll depends on your goals. For example, a multifamily property rent roll might be more complex compared to a single-family rent roll. Starting with a basic template and adjusting it to fit your needs is the best way to create an effective rent roll for your real estate properties.

Now, let’s analyze what this rent roll sheet tells you. First, we can tell that our gross rental income is $5,125 for the month. We can also see that all tenants paid their rent for the month and the different payment methods. This information helps you track who is consistently paying late. Similarly, the square footage of each property gives you insights into how much income each square foot generates. For example, Jesse’s square footage is 750. Dividing this by the base rent of $1,000 results in $1.33 of income each month per square foot.

Moreover, seeing your monthly income can help you determine if you are charging current market rent. Let’s say that the current lease for Sam is expiring. When creating a new lease, you look at your rent roll and see that you aren’t charging enough. At the next renewal, you will let Sam know that rent will be increasing. Having this information before the lease ends helps you maintain consistent income at market rates.

TenantCloud Rent Roll Report

Whether you manage a triplex or a large multifamily portfolio, the TenantCloud Rent Roll Report keeps you connected to your property’s financial reality. It provides a real-time snapshot of rental income, tenant details, and outstanding balances, plus a quick comparison of estimated earnings versus actual income. The latest update features a cleaner layout for easier forecasting, separate Lease Start Date and End Date columns, a Recurring Transactions filter, report preview before download or print, and an improved PDF that matches the on-screen view, now with a footer showing when and by whom it was generated for better traceability.

Learn more: Announcing Improved TenantCloud Reports for Landlords: Enhanced and Fresh

How Landlords and Property Managers Use Rent Rolls

A rent roll is an important document for property managers and property owners. Let’s go through the different ways a property owner or manager might use a rent roll.

• Cash Flow Management – A property owner will use a rent roll to manage the cash generated from rent payments. Cash flow management is an integral component of managing property finances.
• Payment History – Rent rolls track payment history by tenant, including the number of days rent is late and the payment methods. If data shows that a tenant consistently paying late, they may be evicted sooner or at the end of their lease term.
• Gross Revenue by Income Stream - Revenue generated by income stream is an important component of rental property oversight. For example, a real estate investor might track the income received from washing machines to determine if it’s worthwhile to continue paying for this amenity or switch to in-unit options.
• Portfolio Management – Rent rolls give real estate investors crucial insights about how each property is performing. For example, if a property continues to generate a loss, the property owner might look for ways to increase cash flow or sell the property altogether. Gross income reported is also an integral component of calculating return on investment.
• Lease Management – Just like managing the income is important as a landlord or property manager, so is lease management. Having a general idea of lease end dates avoids missed renewals and decreases vacancies.

Property managers and owners may use other reports in conjunction with rent rolls to manage rental properties, like the profit and loss statement, cash flow statement, and other internal reports.

How Lenders Use Rent Rolls

Financing real estate can be a tedious and complex process. However, having up-to-date and accurate rent rolls can make it easier for lenders to evaluate your cash flow, gross income, and other important information about your property. Here are a few of the ways that lenders use rent rolls:

• Verify Income – Lenders will use your rent roll as a part of the income verification process. They will compare income received against bank statements and leases to calculate net operating income, the stability of your portfolio, and how much income you will receive in the foreseeable future based on when the lease expires.
• Assess Risk – Rent rolls show vacancy rates and the quality of your tenants. By analyzing payment history and empty units, lenders will be able to predict future payment disruptions and your ability to repay the loan.
• Loan to Value – Certain loan options, like debt service coverage ratio loans, determine your lendability based on the income the property generates. This makes your rent roll a critical document to figure out the true value of what the property is worth and how much you can borrow.

If you plan on refinancing, purchasing a new property, or taking out another type of loan, your lender may request a rent roll for supporting documentation.

How Buyers Use Rent Rolls

Real estate investors looking to add to their portfolio will request rent rolls, especially for certain property types, like multifamily property. Their main goal is to evaluate the cash flow, revenue streams, and other critical information about the property. Here are a few more uses:

• Determine Liabilities – Your rent roll will generally contain security deposit information. Prospective buyers want this information to understand how much they may need to repay at the lease expiration date.
• Analyze Cash Flow – Most prudent buyers would hesitate to purchase a property that is expected to lose money each month. By analyzing cash flow on a rent roll, buyers can understand how the financials will pencil out.
• Uncover Value-Add Opportunities – Rent rolls break down different income streams, helping prospective buyers uncover value-add opportunities. For example, maybe the buyer notices that there aren’t any vending machines or coin laundry options. This situation could present a new opportunity to increase gross revenue.

It’s important to note that buyers will generally request past and current rent rolls. This gives them a full picture of your revenue over a certain timeframe, such as one year.

Summary

Whether you are a property owner or a property management company, understanding the fundamentals and how to use a rent roll is important. This document will be crucial to track lease start and end dates, monthly income, and identify new opportunities. Equipped with this data, you can make more informed business decisions to scale your portfolio and cash flow.