Understanding the Importance of Rent Rolls in Commercial Real Estate

Managing your property’s finances can be daunting as a commercial real estate owner. A rent roll is one of the most essential tools for managing your rental income. A rent roll is a document that outlines each tenant’s rental information, including lease terms and rent payment details. This blog will dive deeper into the importance of rent rolls in commercial real estate and how they can help you manage your properties more efficiently.

What is a Rent Roll?

A rent roll is a detailed report that shows how much money a building makes from rent. It offers information about each tenant, like when their lease starts and ends, how much rent they pay, and even a breakdown of what you are collecting for the additional rent to cover operating expenses, sometimes called common area maintenance expenses (CAM). Rent rolls are very important for figuring out how profitable and valuable a business real estate investment is.

Why is a Rent Roll Important for Property Owners and Managers?

Rent rolls help property owners and managers track and look at the rental income from each property in their portfolio. They make it easy to find renters or people who are late on payments, so action can be taken quickly. Rent rolls provide information about when leases are ending and being renewed, which helps keep vacancies to a minimum. Furthermore, they can be used to compare market rent to determine if rental rates are competitive and find growth possibilities.

Rent Rolls Help You Track and Collect Rent Payments

One of the most crucial elements of owning commercial real estate is collecting rent payments on time. Rent rolls provide insights into rent payments, including details on outstanding balances, late payments, and payment histories. This information can help you stay on top of rent collection, identify issues early on, and take action when necessary.

Rent Rolls Help You Analyze Your Property’s Financial Performance

Rent rolls provide a comprehensive overview of the income generated by each tenant and the building as a whole. You can analyze the data in the rent roll to understand trends and patterns, such as which units are generating the most revenue and which tenants are consistently late with payments. This information can assist you in making key financial decisions such as budgeting, forecasting, and identifying areas for improvement.

Rent Rolls Can Be Used For Tenant Communication

Rent rolls also contain important contact information for each tenant, including phone numbers and email addresses. This information can be useful for communicating about outstanding balances, upcoming lease renewals, and maintenance or repair issues. By staying in touch with your tenants, you can create a positive relationship that promotes better tenant retention and reduces turnover rates.

Rent Rolls Can Help with Due Diligence

Rent rolls can be used as part of the due diligence process in commercial real estate transactions. Potential buyers can use the data provided in the rent roll to determine the property’s value, lease rates, and income-generating potential. By having an accurate and well-maintained rent roll, you can make your property more attractive to potential buyers and achieve a higher selling price.

A Spreadsheet Rent Roll

Many owners and landlords we speak with have developed their rent roll in a spreadsheet format. Multiple team members inconsistently maintain the spreadsheet. This means that whenever the rent roll needs to be used for its explicit purpose, there is concern about data accuracy since many fields need to be updated monthly and annually. A rent roll, especially in a spreadsheet format, is a living document that requires attention to keep it current. There are other options that automate this activity, which removes the manual work and helps to eliminate mistakes and inconsistencies in data. This is where STRATAFOLIO comes in.

Rent Rolls Can Help with Financial Reporting

Rent rolls play an important role in financial reporting, as they provide a clear and detailed view of your property’s rental income and expenses. With STRATAFOLIO, you can easily create rent rolls from multiple sources to include the information you need for your specific use case.

You can use this information to generate accurate financial statements, including income statements and balance sheets. This information is essential for monitoring your property’s financial health, meeting lender requirements, and preparing tax returns. Additionally, you can run a rent roll using QuickBooks easily with STRATAFOLIO’s bi-directional integration.

Rent rolls are a crucial tool for managing your properties’ rental income, financial performance, and tenant relationships. STRATAFOLIO can help you generate a clean, accurate rent roll easily. Whether you own a single commercial property or a portfolio of buildings, having an accurate and up-to-date rent roll can help you stay organized, make smarter financial decisions, and improve your overall property management. Be sure to keep your rent roll updated regularly and contact the professionals at STRATAFOLIO for expert guidance on rent rolls.