Anyone who works for me knows I am a stickler for documentation. I cannot hear what you are saying, I can only read what is date stamped. There are 2 primary reasons documentation is vital to your property management business (If you are operating your own rentals, you have a property management business): Secure Property Value and Win in Court.
This article assumes you are running your business fairly and ethically, and you are keeping accurate profit & loss records. Beyond being an ethical person with bookkeeping skills, implementing the tips in this article will take your business to the next level.
Documentation allows you to identify common problems & prevent them from spinning out of control.
Having proper documentation readily available secures the value of your property, which is quite literally it's financeability. No underwriter can approve a property with poor Profit + Loss Statements or lack of documentation.
There will be a day, likely very soon, you find yourself in small claims court. Both you and your disgruntled tenant will present your cases, both feeling right and entitled to whatever funds are being disputed. All bias aside, the person with the best documentation wins in court.
In short, everything. But, if you lack the bandwidth to document everything, here is my opinion on documentation in order by priority:
Security deposit disputes are by far the most disputed issue in apartment management, hands down. I've written an entire article on our Move In & Move Out procedures as well as our Turn Over Process, take a look at these articles for further discussion. If you are not overly documenting your Move In & Move Outs, start here & implement the next 6 as you build your business over time.
Documenting your application process is especially important. When someone applies for your property, you need to document every attempt to get their proof of income, document your attempt to contact previous landlords, and document the reason you are approving or not approving an application. If someone comes back and claims they were qualified for the unit but rejected because of some fair housing violation, you will be glad you have all the documentation in place to show what was or was not provided. Your documented application process will show why the potential tenant was rejected. Any fair housing official would not send you to court after seeing all that documentation, because there is no fair housing violation.
You absolutely must document every time you post notice; This means keeping a physical copy of the notice & keeping a picture of the notice posted to the unit door. Again, pictures are worth more than words, but just written words are better than nothing.
You need a documented system for analyzing market rent and deciding when to increase rent. If you get accused of increasing rent because of what someone did or didn’t do or because they were late two months ago, or because you’re retaliating, you can show with your documentation that you did not retaliate. The rent increase was not retaliation, but part of a systemized process you have always had in place. A paper trail will show that it’s not a personal retaliation.
Keeping a record of maintenance requests & complaints helps you identify recurring problems in your building, either physical or human in nature.
For example, in one of our 28 unit buildings, we received 3 separate maintenance requests from 3 different units in a 3 month period, that water was coming through the ceiling from the bathtub into the unit below.
The actual leaks were being caused by a failed overflow valve, literally a $3 piece of hardware that simply needed to be replaced. But because of the damage to the ceiling, the sheetrock had to be cut out & patched.
Rather than wait for the remaining 25 valves to fail, we proactively replaced each valve to prevent further, costly, work orders. By reviewing the past work orders, we figured out the pattern. I know what you're thinking... that's obvious! But without the documentation and the subsequent review, would we actually have remembered that the 3 leaks were caused by the same thing? Maybe, but doubtful. Leaks are common. We may have missed it which would have costs thousands, rather than $400.
Lastly, you may find that certain individuals within your building have an above average amount of maintenance requests, complain an above average amount, or get complained about most often. This documented record of issues with a tenant may be just cause to not renew a lease should you determine this to be a fair action. Without the documentation, however, you would be hard pressed if someone accused you of some other form of discrimination. You may even question yourself!
Each of our buildings are maintained with custom daily, weekly, monthly & annual maintenance programs. These
projects and tasks should be well documented, any issues documented, and long term planning documented. Notes from the front line staff and vendors speak volumes when you attempt to sell your building.
Every time you replace an appliance, install a ceiling fan, or replace flooring, document this improvement. This will allow you to pull up appropriate receipt & invoices to prove the installation and justify your sales price.
Now this one can cause some raised eyebrows, especially from my staff, but documenting your interactions with tenants, vendors & contractors does help in the long run. Maybe it comes from my sales background, where we take notes on previous conversations to continue on the next call, but documenting the positive interactions can be helpful in future conversations, perhaps even diffusing a difficult situation.
Documenting conversations with vendors & contractors has saved literally tens of thousands for our company & our clients, but holding vendors accountable to their word and helping everyone understand/remember what decisions were made and why. We question our vendors on prices often, document what was said, often resulting in a call back. Then we have a record of what's going on with each bill or invoice, and who we need to speak to in order to get the fair pricing our clients deserve.
The importance of documentation cannot be overstated. When in doubt, document.
Sagareus Real Estate is delighted to be highlighted in the Top 20 Picks for Property Management Companies in Bellevue, WA by PropertyManagement.com in...