Rent rolls are one of the most important documents in commercial real estate management, but they can be a challenge to create and maintain. This is especially true if your business uses QuickBooks for accounting, since QuickBooks isn’t built specifically for commercial real estate needs.
In this article, we’ll discuss the importance of accurate rent rolls, the difficulty of creating rent rolls in QuickBooks, and the better alternative that helps rent rolls work for you.
What's a Rent Roll in Commercial Real Estate?
In commercial real estate, rent roll is a document that collects information about tenants, leases, and rent payments. It often also includes information about common area maintenance (CAM) fees that are collected or paid at the end of each year. Specifically, rent rolls often include:
- Tenant information, including names, contact details, and business types
- Rent payment status
- Lease start and end dates
- Lease escalation details
- Common area maintenance fees
In short, rent rolls are a go-to place for explaining your tenant base, and is important for helping you catch issues and create long-term plans.
What are the Advantages of Good Rent Roll Management?
In commercial real estate, good rent roll management is key to long-term success. Aside from simply tracking tenant payments, this document provides crucial information about business performance that helps you make strategic decisions. Here are a few of the biggest advantages of maintaining a thorough, accurate rent roll.
Tenant Communication and Trust
Rent rolls help you track information like payment status and upcoming lease endings, renewals, and escalations. When your rent roll is confusing or poorly maintained, it’s easy to make mistakes. Simple mistakes like not realizing a tenant has paid rent strain tenant relationships and erode trust. However, up-to-date rent rolls can help you address issues before they spiral out of control, helping you retain strong tenants over the years.
Due Diligence
Rent roll is an important document used in the due diligence phase of buying a new property. If you’re looking to buy, it’s critical to examine the property’s rent roll to understand what the tenants are like. This might include details like:
- How many tenants there are, as well as how many vacancies
- What types of businesses the tenants run
- If any leases are set to expire soon
- If there are any issues with late payments
Information like this can help you decide if the new property is a strong addition to your portfolio, or if it might offer too many challenges. On the other side, if you’re looking to sell a property, providing a clear, detailed rent roll will make it easier for you engage potential buyers and build trust.
Future Planning
In addition to day-to-day management, rent rolls provide important information about the performance of your properties. For example, it’s an easy place to see if one of your properties has a low tenancy rate, or if several leases are about to expire at the same time. This way, you can strategize in advance to avoid big drops in tenancy and other big issues.
Challenges with Rent Roll Management in QuickBooks
Even though rent rolls are extremely important, they can be difficult for commercial real estate businesses to manage. Many businesses try to maintain rent rolls in spreadsheets, requiring intense manual work to update. Spreadsheets often become impossible to keep up with and hard for teams to navigate.
Other businesses try to use QuickBooks for rent roll management. While QuickBooks is an excellent accounting platform for small and mid-size businesses, it is not designed for commercial real estate needs like rent rolls. It may be possible to create a rent roll in QuickBooks using a variety of custom fields for things like rental income and lease dates, which QuickBooks does not provide on its own.
However, this is not easy to set up or use, especially as your portfolio grows. It’s always best to use software specifically designed for commercial real estate when creating important property reports.
The Solution: Integrated Property Management Software
The good news is that there is a solution designed just for you. Commercial property management software is made specifically to handle tasks like rent roll, including complicated lease tracking and CAM charge calculations. This software automatically tracks your financial data and generates fast, easy-to-read rent roll reports.
Plus, if you rely on QuickBooks for other accounting tasks, you don’t have to give it up. Commercial property management platforms like STRATAFOLIO integrate completely with QuickBooks Desktop and Online, allowing you to leverage all of QuickBooks’ accounting tools alongside key property management functions. And because all your data automatically syncs between both programs, you never have to worry about using old or incorrect information. For the easiest, most reliable rent roll, integrated property management software is the clear answer.