Monthly Reports and Collections of Rent

Monthly Reports

Monthly reports are extremely important deliverables that you receive from your management company. It can assist you in tracking each and every dollar activity of all your investments. More generally, a monthly report can include the following:

• Rent analysis, including rent roll, billings, collections, and arrears.
• List of all the checks issued, including check numbers, payees, amounts, and explanations.
• List of all the accounts payable: open bills, possible reserves or requirements for future major repairs.
• List of accounts receivable, including rent arrears.
• This month's cash flow.
• An explanation of arrears and tenant status, any significant developments of that month.
• General recommendations or suggestions.

As an investor, you should try to set up some monthly meetings with your manager in order to go over the monthly reports. The copies of the report should be provided in advance of the meeting so that you have a sufficient amount of time to properly review the report.

Additionally to the above items, monthly reports should also include:

• A copy of the bank statement.
• A copy showing reconciliation of the bank balance to the balance of the books.
• Copies of bill paid.
• A memo summarizing the month’s operating results and anticipated future events, such as lease expirations, status of lease negotiations, proposed capital improvements and reasons for them, budgets and any miscellaneous manager’s comments.

Rent Collections and Billing
More generally, it is the responsibility of the management company to take care of the rent collections and billings for their clients. Rent bills should be sent to the tenants at least one week in advance.

Management companies usually tend to use bank lockbox systems for accounts receivable as well as rent collections. Below are the required steps in order to operate a bank lockbox:

• You should try to open a separate bank account for each property.

• You should mail each tenant a two-part perforated coupon bill stating his or her rent due, including arrears. This will be prepared prior to the beginning of the month being billed as rent is usually due the first of every month, unless the lease states differently.

• You should try to include a pre-addressed envelope with the lockbox number and bank address inscribed on it. The tenants can directly mail their checks to the bank with the attached coupon.

• Upon receipt of the bill, the tenant mails a rent check, along with the stub of the bill in the preaddressed envelope and retains the main part of the bill for his or her records.

• The envelope is delivered to the bank box number to which it is addressed; a bank employee opens the envelope, records the stub number on the deposit slip delineating what the check is for, and will deposit the check in the proper account. Every day, the bank faxes or e-mails to the owner or management company a list of checks it has received and deposited in the property's account.

In addition, to enabling faster availability of rental income by directing checks to the bank, lockboxes can also offer a very high level of security. You shouldn’t have to deal with numerous checks being delivered at the property management office with the risk of losing them.

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