Effective Record-Keeping Tips for Property Managers

Property management is a paperwork heavy and time-sensitive profession, says Mary Ann Hallenborg Esq., assistant teaching professor of property management at Drexel University's Goodwin College in Philadelphia. Because property managers collect and spend a significant amount of cash every month, they’re on the clock all the time.

“It’s absolutely vital for property managers to maintain accurate reports and to know what to do with them,” she says.

But record-keeping is a sensitive, complicated process. Jon Taylor, president of TAB Property Management, says his company is currently evaluating what works best for them in terms of what to track and when physical copies are needed or when electronic copies will suffice.

“I think the whole industry is at a crossroads,” he says. “It’s difficult to know what you need so that you can be 100 percent comfortable.”

Although record-keeping is unique to your building’s operations, there are some steps everyone can take to ensure you’re covering all your bases.

What records should you keep?
It’s important that all necessary documents are properly managed, stored and accessible, says Hallenborg, and there are various types of records to keep, including:

• Agreements: leases, vendor contracts
• Bank account information: statements, records, copies of checks or money orders
• Financial reports: rent collections and delinquencies, income and expense reports, cash flow statements, tax documents
• Site management: tenant service requests and maintenance work reports
• Permits and licenses: to run equipment or to make any alteration to the building

Although it can be overwhelming thinking of all the things you need to keep record of, a good rule of thumb is that if you spend any time considering whether or not you should keep it on record, then you probably should.

What kind of copies should you keep?
You might already know what records you need to keep, but do you need physical and electronic copies? Hallenborg recommends having a physical copy of anything that’s a contract or has a signature. When it comes to invoices, she recommends keeping physical copies until they’ve been paid or even until at least the end of the tax year.

Taylor says it’s ideal to have physical and electronic copies of everything, but if you’re really looking to conserve physical space, he recommends only keeping electronic versions of items that don’t have a current financial link to your business but are kept for historical purposes, such as a vendor bid that didn’t go through.

“We’re more comfortable only keeping e-copies of documents that helped us make a decision but weren’t a part of the financial component—ones not tied to the bill at the end of the day,” he says.

How can you ensure security?
It can be very helpful to keep all your original documents in one place. Taylor says his company’s files are kept in its Des Moines-based operation center under a lock-and-key file system. For electronic files, he emphasizes how important it is to create access rules and keep tabs on who has viewer rights. Hallenborg says it’s critical to have a backup policy for your electronic files; she recommends backing up daily or as often as you make changes.

To prevent losing an incredible amount of information if the server crashes, Taylor says his company has a “hard accounting close” every month where no more information may be entered into that period. This is to prevent losing no more than 30 days of data.

“After the close, we print and keep a physical [copy],” he says. “That way, if there is ever a data problem, we would have starting numbers that would be no more than 30 days old.”

How can software help you?
It can be very helpful to automate your record-keeping process with the help of software. Hallenborg says it’s highly important to have software support, and she recommends buying the best integrated property management software package you can afford. She recommends checking the Institute of Real Estate Management’s (IREM) publication Journal of Property Management, which has departments called “New Products” and “Gadgets” that spotlight recent software releases.

Consider purchasing software that can automate processes such as making online rent payments, incurring late fees and reconciling bank statement information. There are many software packages available that also allow you to form a budget or facilitate payroll via a server or online site. Buying dedicated management software can consolidate many tasks by keeping everything in one central location, Taylor says.

How long should you hold on to records?
Hallenborg recommends keeping copies of leases, contracts, agreements, financial records and other important documents for 10 years. However, sometimes in an audit or lawsuit, you might need a document that’s older than 10 years, so she also recommends keeping an electronic archive. With respect to sensitive files (anything that contains credit or privacy-related information, for example) that you no longer need, she strongly advises investing in a shredder.

Why record-keeping is so important
Staying on top of your record-keeping gives you the assurance that you have any information you need when you need it, but Hallenborg also says it gives you the opportunity to evaluate how your business operates. Is your income and expense process well-organized? Are your maintenance requests answered in a timely manner? Are your methods consistent and cost effective?

“Some property managers keep statistics to measure how well they’re doing,” she says. “You can track your efficiency and then maybe even turn it into an advertising campaign, [like] ‘Fastest service in town.’”