Property management companies do many things for their owners. They help investors buy properties in the right neighborhoods, find good tenants, and keep close tabs on rents and expenses to maintain a consistent rental income flow. They are also archivists, documenting everything associated related to each rental. DenCO Property Management & Sales (DenCO) is a stickler for documentation.
Rental Property Financial Records Management
DenCO keeps track of rental income, expenses, and receipts for each property for accounting, budgeting, and financial planning purposes. Accurate records simplify tax reporting and allow owners to prove their income and expenses if audited. Complete financial records help owners understand the profitability of their investments, helping them make better decisions on when to sell, upgrade, or invest in more rental properties. Good documentation also minimizes the risk of bookkeeping discrepancies between property managers, tenants, and owners.
Tenant Management
DenCO believes the best tenant management tool is a strong lease. The lease agreement spells out tenant and landlord responsibilities. Upon signing, the property manager should review the lease with the tenant to set expectations for both parties, setting a foundation for a good relationship.
Documenting tenant interactions, including lease agreements, move-in/move-out inspections, maintenance requests, and communications, allows property managers to manage their properties to the satisfaction of their renters, which is good business because happy tenants tend to renew and stay.
Building Maintenance & Capital Improvements
DenCO does two inspections per year on all the properties we manage. The inspection is documented; keeping good records of maintenance requests and complaints helps property management companies identify problems early before they become problematic. If a property has recurring maintenance issues, maybe it is time to ask the owner to replace a system or appliance. All the minor problems should be promptly repaired, while larger projects need more planning and coordination with the tenant and owner. Good notes of any interactions with vendors allow property managers to hold vendors accountable for what they promised and at what price.
Colorado courts take a hard stance against landlords that do not maintain habitability. Good documentation lowers risk by proving a property manager’s due diligence to solve issues promptly. In case of an accident resulting in bodily harm or property damage, proper documentation can assist in understanding the situation and mitigating legal risks.
Legal Protection
Every property management company will eventually find itself in a small claims court. It is just the nature of the business. The adage is true – the party with the best documentation usually wins in court. Proper documentation creates a clear record of actions taken, agreements made, and communications exchanged with tenants, contractors, and other parties. Thorough property records are invaluable in demonstrating compliance with laws, regulations, and lease agreements in legal disputes. Below are the most important documents to track in order of priority.
- Tenant Screening – A great tenant meets or exceeds the minimum requirements to rent a property and adheres to the lease terms throughout their tenancy. With the recent rental regulations coming out of the State of Colorado and Denver, property managers must document all screening steps. Ironically, there is pressure when screening an applicant. The owner wants the property occupied, and the tenant wants a place to live. It is up to the property manager to find the right renter. It is never wise to alter minimum requirements, not discriminate for any reason, and under no circumstances waive income verification or crime background checks.
- Move In – Move Out – Once the applicant is approved and the lease is signed, the property manager schedules the move-in date when the tenant moves and takes possession of the rental unit. DenCO recommends meeting the tenant at the property to provide keys, reiterate important lease terms, review safety features, and answer any questions. Next, tenants fill out a Move-In Condition Report and file it in the tenant’s folder.
- Notices & Lease Violations – Property managers must carefully document all lease violations and add them to the tenant’s paper or electronic folder. Be sure to back up each violation and take a of picture of the notice when posted on a unit door.
- Rental Increases – An essential role of property management companies is to rent properties at proper rates. These rates should be based on the property management company’s formalized market analysis process. The analysis justifies rental increases on market forces such as property value, location, and access to amenities such as restaurants, parks, and shopping. Inflation causes jumps in rent, and high mortgage rates force people to rent versus buy. The process creates a paper trail showing that any increases are not retaliation for what a tenant did or did not do or that they are late paying.
- Complaints & Requests – Good records will identify individuals with many maintenance requests, complain a lot, or get complained about most often. The documentation can justify a not-to-renew decision. Without the documentation, the property manager exposes themselves to being accused of various offenses by their tenants.
Historical Data
Maintaining comprehensive documentation over time creates a valuable historical record of each rental under professional management. These records help property managers identify trends, patterns, and areas for improvement, leading to better decision-making and enhanced property performance.
Owners needing help managing and documenting each rental should hire DenCO. DenCO manages over 150 rentals in the DU, Washington Park, and other neighborhoods in the Denver area and has been in business since 1999. Call us at 303-722-9688 or click here to complete a contact us form.
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