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Why Go Paperless?

Why Go Paperless?

The Benefits of a Paperless Property Management Office

Property managers who run efficient paperless management offices consistently out-perform their competition.

My next few posts are going to be a series about why you should run a paperless real estate and property management office. I will be covering the benefits of a paperless office.  I will also show you where your opportunities are to have a paperless office. And finally, I will do a few posts on cloud-based real estate and property management software, equipment that can help you go paperless and platforms you can incorporate into your system that will help you ditch the paper!

In this post today, we will be going over some of the benefits of having a paperless real estate and property management office.  Here we go!

Cost Savings

The cost savings of having a paperless office are recognized in the areas of reduced office supplies and reduced cost of paper storage. When information, correspondence and legal documents are securely generated and stored online, fewer office supplies are used. Savings are realized on paper, envelopes, paper checks, printer ink, toner cartridges, postage, printed stationery and printed forms just to name a few.  When documents are stored and protected from loss in case of fire, water damage or theft, you’re also reducing your risk level within your office. When you have fewer papers to store and file, that means you have fewer filing cabinets that take up your office space.

Time Savings

The time savings of paperless office are noticed in the areas of reduced staff hours and reduced manual data entry time and errors. Staff hours previously dedicated to filing, storing, retrieving and delivering paperwork, including trips to the bank, are eliminated. Staff can be reduced, redirected or used to manage a greater number of listings, properties and units.

Accounting is typically built into cloud-based real estate and property management software, so no double entry is required. An accounting software solution lowers the risk of bookkeeping errors and creates a more efficient system for tax preparation.

Increased Cash Flow and Greater Efficiency

Online payment of commissions and rents, remote payment processing and online rental applications serve to maximize cash flow and improve earnings. You’re able to work and access these files remotely, and more easily track and manage the business from wherever you are.

Customized reports can be generated for both management and the owners use. Frequent oversight can help predict where efforts need to be made to improve operations and where to reorient staff and resources.

In my next post, I will be giving you some ideas of where your opportunities to go paperless withing your office might be.  Stay tuned!

Some information compiled by and obtained from www.appfolio.com

Trust Accounting for Property Managers – Part Two

Trust Accounting for Property Managers – Part Two

In my last post about trust accounting for property managers, I discussed what trust accounts are and why you should use them. In this post, I am going to give you some tips that well help you stay out of trouble with the Real Estate Commission and some general record-keeping tips for maintaining your trust accounts.

Staying Out of Trouble

A few tips to keep you in the good graces of your Real Estate Commission when it comes to trust accounts:

  • Be sure to deposit all funds in a timely manner.  Your state commission can provide you with their time requirements for depositing trust funds, but a good habit to get into is depositing them within 48 hours of a fully executed lease. If you use software solutions that allow for online payment of rent and other funds, this usually isn’t a problem if you require your tenants to pay their security deposits within 48 hours of their lease being fully executed.
  • If you plan on running rents and property expenses through a trust account, be sure not to include security deposits in this same account.  Maintain a separate account for holding security deposits so they aren’t co-mingled with rent and expense accounts.
  • Make sure you keep all of your trust accounts reconciled on a monthly basis. If there are any discrepancies within the account, resolve them immediately.

Make it a strict company policy to never: pay bills using security deposit funds; co-mingle funds between clients; or use trust account funds to pay your own company expenses.

To make the entire process of trust accounting easier, use a property management software solution that incorporates trust accounting to help keep you in compliance. This software system should offer detailed reporting on trust account balances for each of your properties.

Record Keeping Tips for Trust Accounts

Each state commission has different requirements of the type of record keeping the want to accompany your trust accounts.  Always check with your state-specific Real Estate Commission for their record keeping requirements.

A few of the things you might want to keep in mind when setting up your trust account records are:

  • having a copy of the management agreement for all of your properties/clients
  • having a copy of the lease agreements for all tenants you manage
  • maintain a record of all checkbooks or check registers for each trust account
  • maintain a listing of all checks issued from each trust account, including cancelled and voided checks
  • maintain bank statements for each trust account, as well as your bank reconciliation
  • maintain bank deposit slips for each trust account you keep
  • have copies of all financial and management reports that you provide to the property owners
  • have copies of all invoices that have been paid from your trust accounts
  • keep correspondence concerning security deposit refunds or forfeits from your trust accounts

When it comes to your Real Estate Commission, and especially in the case of an audit, it’s always best to have too much information than not enough.

Trust Accounting for Property Managers – Part One

Trust Accounting for Property Managers – Part One

Trust accounting is a term that all property management and real estate business owners should be very familiar with. My next couple of posts will cover trust accounting:  what trust accounts are, why use them, record keeping and staying out of trouble. These will be great posts to read if you’re not familiar with trust accounting, just need a refresher, or want to make sure you’re properly accounting for trust funds.

What Are Trust Accounts and Why Should You Use Them?

A trust account is usually a separate account set up by a real estate broker or property manager to hold and manage funds that belong to, and are held in trust for, their clients. These clients can be the owners of managed properties and purchasers of real estate for sale. The typical type of funds held in a trust account are security deposits and earnest money. For the purposes of this and the next blog post, I will be concentrating on trust accounting for property managers.

The guidelines and requirements for setting up and maintaining trust accounts can be varied from state to state.  But one thing that all states agree upon is that using a trust account in some form is necessary.

One of the recommended guidelines for handling trust accounts is to establish two accounts.  You will want to hold security deposits in one account, while rents collected and bill payments are processed through the second account.  In some cases, this could be more than the trust account requirements of some states. It is also not very practical for property managers who manage single-family homes.

If you’re curious why you should manage two separate trust accounts, here are just a few of the benefits:

  • You will be able to greatly improve your accuracy in presenting your clients with reconciliation reports at the end of each month, including an accurate accounting of all income and expenses.  Maintaining two separate trust accounts also makes it easier to track any transaction that goes into or out of the account.
  • Property managers can benefit from a thorough understanding of property performance based on the activity maintained for each client. Any disputed transactions can be easily located and verified Visit This Link.
  • Maintaining two separate trust accounts also provides a cleaner audit trail by significantly reducing the opportunity to co-mingle funds.  Co-mingling of funds is a major point of contention in most trust account audits. If you maintain your trust accounts properly from the beginning, it greatly reduces your chance of being audited by your Real Estate Commission.

 

If there is any doubt that you are handling your trust accounts correctly, and even if there isn’t, you should make sure you know your state laws. The first place to look for advice and guidelines is from your state-specific Real Estate Commission. Most Real Estate Commissions will have regulations about how you need to register your trust accounts, how you need to maintain them, and what type of record keeping they feel is best for your trust accounts.

Be sure to read my next post which will cover ways that you can stay out of trouble when it comes to your trust accounts and some suggested record-keeping tips!