June 27, 2023

15 Best Property Management Accounting Software in 2024

Chief Customer Officer - Second Nature

Kristin Johnson Founder & CEO of TripleTie

Property management accounting is a specialized branch of accounting that deals specifically with the financial management of rental properties. Property management accounting includes tracking rental income, managing expenses, handling tenant deposits, and producing financial reports. It helps property managers maintain accurate and comprehensive financial records for each property they manage.

In today's complex real estate landscape, managing single-family rental properties can be a daunting task, especially when it comes to accounting and finance management.

Understanding property management accounting, as well as the best property management accounting software to support it, can make this task significantly easier.

In this article, we're talking to a property management accounting expert. We’ll delve into the best property management accounting software available in 2023, and we’ll help you choose the right software that fits your property management needs. We'll also address frequently asked questions about property management accounting software, including aspects like ease of use, integrations, pricing, and support.

In general, property management accounting software serves to alleviate the time and effort that might be required to manage finances manually. It can also help plan for expenses, foresee any cash flow issues, and make better-informed financial issues. And perhaps most importantly, it helps property managers stay in compliance with requirements around tax calculations and reporting.

Note that there are two key components of property management accounting: corporate and trust accounting.

Corporate accounting involves the financial transactions and record keeping of the property management company itself and is generally the same kind of accounting you’d do with any business or corporation. This might include the company's operational expenses, income, taxes, payroll, etc.

Trust accounting, on the other hand, is unique. It concerns the financial management of clients' funds held by the property management company. This can include tenant rents, security deposits, and funds reserved for property maintenance or repairs. It's crucial to keep these funds separate and accurately tracked to comply with legal requirements and maintain transparency with property owners.

Because of the unique nature of bookkeeping with trust accounting – and its relevance for property managers – we’re mostly focusing today on trust accounting, or software that can manage both corporate and trust accounting.

So, whether you're new to property management or an experienced professional looking to upgrade your software, this article has something for everyone. Let's get started!

Meet the Expert: Kristin Johnson, Founder & CEO of TripleTie

Kristin Johnson founded and leads the property management accounting solution TripleTie, which is designed to help property management companies manage and conduct accurate trust accounting.

Related: Best Single Family Property Management Software

Best Property Management Accounting Software

Let’s go over some of the best property management accounting software solutions in 2023. After that, we’ll also share an extensive FAQ that we had with Johnson about the ins and outs of property management accounting.

Before diving into our list, we asked Johnson what good property management software should include.

“Having the ability to work within one system is huge,” she says. “Rather than having to parse out, for example, I do my screening over here, and I do my maintenance over here. Instead, you have it all integrated and built-in, and the system talks well with itself. You’re not having to import and export so much data. That’s crucial.”

She gives an example of a time when she was using a platform that didn’t have that capability.

“When we were working in New Mexico, we had to charge sales tax on services. So our management fees, our RBP, all of those things had to have sales tax added onto them. Our software at the time didn't have a function built where I could say, ‘This item is taxable, and this is the tax rate.’ I had to manually create recurring bills on every single one of those fees. And then, every year, when the state updated the sales tax rate, I had to go and update thousands of recurring bills. It was a nightmare!”

So, as we go through the list, keep in mind that different software has various degrees of customization, open APIs, etc. Cost is a big consideration, but looking for an all-in-one is also important.

1. Rentvine

Johnson’s top recommendation for accounting software is Rentvine.

“Rentvine is really dialed in on trust accounting,” Johnson says. “There’s no need for a lot of the workarounds that we see in some of the other trust accounting providers. At its core, it’s a true trust accounting platform, and then the beauty and usability are built on top of that piece.”

Rentvine is deeply customizable for property management tools and needs, with the ability to build your unique owner statements, custom management fees, custom late fees, etc.

“The other thing I love about Rentvine is that it does have an open API,” Johnson says. “So if you did want to integrate with an external maintenance company, for example, you can get a seamless integration through the API.”

Pros:

User-friendly design with an intuitive dashboard that simplifies property management and accounting tasks.
RentVine's accounting system is robust and includes automatic rent collection, workflows, real-time expense tracking, and detailed financial reporting.
Features like online tenant portals, CRM, maintenance request management, and built-in messaging make tenant communication more streamlined.

Cons:

Some users have noted that the mobile app lacks some of the desktop version's features.
While RentVine offers excellent features, the platform may be more expensive compared to other options, especially for smaller property portfolios.

2. AppFolio

AppFolio is an extremely popular property management platform that works well for both residential and commercial property management. It has a modern and intuitive interface but can be pricey with add-ons and complex to use.

What we like about AppFolio is the reporting ability, automation (late fees, smart bill entry, etc.), utility management features, etc. The drawbacks include the price and, as Johnson points out, it’s not as customizable as she would want for an accounting piece.

“It is not a super strong accounting platform and does require a lot of workarounds,” Johnson says.

However, if you’re willing to use a few workarounds and you like AppFolio for the other key features, it does have a solid accounting platform.

Pros:

AppFolio provides a comprehensive suite of accounting tools that include automated invoicing, ACH and online payments, financial reporting, and bank reconciliation.
It offers a CRM with excellent resident and owner portals for transparent communication, metrics, and easy access to financial data.
AppFolio supports both corporate and trust accounting, which is important for regulatory compliance.

Cons:

AppFolio is not as customizable as other software options and may require workarounds.
While AppFolio is feature-rich, it has a steeper learning curve which may be challenging for less tech-savvy users.
Pricing is based on a per-unit model, which could make it expensive for managers with a smaller number of properties.

3. Buildium

Buildium is a comprehensive property management software designed to simplify all facets of property management, including robust accounting features. It provides seamless handling of all property-related transactions, from tracking rent payments and vendor bills to handling maintenance costs and fees. The software also supports both corporate and trust accounting, ensuring legal compliance and transparency.

Pros:

User-friendly interface with a strong emphasis on accounting.
Automatic bank reconciliation, making it easy to manage multiple accounts.
Robust reporting, including balance sheets, cash flow, and income statements.

Cons:

The learning curve can be steep for those new to property management software.
Advanced key features may require premium plans, which could be costly for small businesses.

4. Yardi Breeze

Yardi Breeze is a cloud-based property management software ideal for smaller-scale PMCs. The platform offers a robust suite of tools, including strong property management accounting capabilities.

Pros:

Yardi Breeze provides in-depth financial reporting and accounting features, from tracking rent collection and expenses to generating financial statements.
It has a user-friendly interface and offers automated invoice processing and bank reconciliation, simplifying accounting tasks.
It supports both corporate and trust accounting, crucial for legal compliance and transparency.

Cons:

The software is feature-rich, which may result in a steep learning curve for those unfamiliar with property management software.
Some users have reported that customer service response times can be slow.
Its comprehensive features come at a higher price point compared to other options in the market, which may be a barrier for smaller businesses.

5. Hemlane

Hemlane is a cloud-based property management solution designed for small to midsize businesses, with a focus on facilitating the relationship between property owners and managers, residents, and service professionals.

Pros:

Hemlane's accounting features are comprehensive, providing the ability to track income and expenses, automate rent collection, and generate financial reports.
It supports both corporate and trust accounting, helping property managers maintain compliance and transparency.
User-friendly and intuitive interface, which is a big plus for those new to property management software.

Cons:

While it has a good range of features, some users report that it lacks the depth of more comprehensive management systems.
Some users have reported occasional system slowdowns and bugs.
Limited customer support hours can make it challenging for businesses that operate outside of these times.

download rental inspection checklist template

6. TenantCloud

TenantCloud is a cloud-based property management software solution suitable for landlords and property managers of all sizes. It offers a wide array of features, including a dedicated accounting module.

Pros:

TenantCloud’s accounting features allow users to track income and expenses, send invoices, collect online payments, and generate financial reports.
Its intuitive interface and ease of use are especially appealing for those new to property management software.
TenantCloud supports both corporate and trust accounting, facilitating legal compliance and transparency.

Cons:

Some users report that the system can be slow and occasionally glitchy.
While its basic features are on a free plan, advanced accounting functionalities come with paid plans, which might be a drawback for small businesses.
Some users have reported that the customer service could be more responsive and supportive.

7. Rent Manager

Rent Manager is a versatile property management software solution that provides a wealth of features tailored to property managers, including accounting.

Pros:

Rent Manager's accounting features are comprehensive, enabling users to track income and expenses, automate invoicing, and payment processing, and produce detailed financial reports.
The software offers both corporate and trust accounting, ensuring compliance and providing transparent financial management.
Rent Manager's open API allows for integration with numerous other software solutions, making it a flexible choice.

Cons:

Some users find Rent Manager's extensive features a bit overwhelming, leading to a steeper learning curve.
The cost can be high for small businesses or those with fewer units, as pricing is based on the number of units managed.
While Rent Manager offers comprehensive support, there are some reports of slower response times.

8. Propertyware

Propertyware is a cloud-based, end-to-end property management software that offers a range of features, including a strong accounting suite. They offer custom fields and automation for PMs, real estate investors, and residents.

Pros:

Propertyware’s accounting module is quite comprehensive, allowing users to track income and expenses, handle online payments, and generate detailed and customized financial reports.
It supports both corporate and trust accounting, important for maintaining transparency and legal compliance.
It includes an “owner portal” and maintenance request management features.

Cons:

The initial setup can be complex to get right, and there can be a steep learning curve for those new to property management software.
The pricing is not ideal for smaller PMCs with fewer than 250 rental properties.

9. Rentec Direct

Rentec Direct is a web-based property management software designed for “landlords” and property managers, offering a wide variety of features, including an extensive accounting system.

Pros:

Rentec Direct's accounting tools provide capabilities for tracking income and expenses, automating rent collection, and producing in-depth financial reports.
It supports both corporate and trust accounting, helping ensure legal compliance and transparency.
Features like owner portals, work order management, tenant screening, and SMSM services.

Cons:

The product and interface are older and less intuitive than others on the market.
The reporting feature, while robust, may require some time to understand and use effectively.
Some users have reported that the system can be slow at times, particularly during peak usage hours.

10. DoorLoop

DoorLoop is a property management software designed to streamline the management process for property managers with all sizes of portfolios. It comes with a robust accounting suite, among other features.

Pros:

DoorLoop's accounting features are extensive, allowing for the tracking of income and expenses, rent collection, and generation of financial reports.
It supports both corporate and trust accounting, ensuring legal compliance and providing transparent financial management.
The software has a user-friendly interface, making it an attractive choice for users with varying levels of tech proficiency.

Cons:

While DoorLoop offers many features, it may take some time to get used to all of its capabilities, and it is less customizable than other options.
Some users have reported occasional system slowdowns and bugs.
The cost could be high for those managing a smaller number of properties as the pricing is based on the number of units managed.

Honorable Mentions

The list above is not intended to be exhaustive, but we did want to make a brief mention of a few other software applications for property managers that incorporate some accounting features:

RealPage
RealPage provides a technology platform rather than a software application per se, with the aim of enabling “real estate owners and managers to change how people experience and use rental space."
ResMan
Tagline: “ResMan’s industry-leading property management platform helps multifamily and affordable housing managers operate more efficiently and deliver higher rates of return to investors.”
Entrata
Tagline: “The operating system built to help you focus on residents, not technology.”

A Note on Other Accounting Software

While this article focuses on software tailored to property management accounting, it's worth mentioning general accounting solutions like QuickBooks online.

QuickBooks, a well-known accounting software, is versatile and can be effectively used in a variety of industries, including the real estate business. It offers robust features like tracking income and expenses, invoicing, and generating detailed financial reports.

However, because it's not specifically designed for property management, it may lack specialized features like tenant and lease tracking or lease management, maintenance requests, or property-specific reporting. That's why it didn't make our main list, but for some property managers, especially those managing a small number of units, it might serve their needs adequately.

FAQ: Property Management Accounting

At Second Nature, we’ve been in the SFR property management space for a long time. We gathered up some of the most burning questions property managers ask about property management accounting.

Kristin Johnson helped us answer them.

What accounting should I use for property management business?

Kristin Johnson: The type of account property managers need is a true trust account – which very few banks actually offer. Many local banks or even big ones like Chase and Wells Fargo will give you a checking account and then label it a trust account. That is NOT a trust account.

In normal bank accounts, you have $250K of FDIC insurance. A trust account has FDIC insurance per owner that has funds in the account. So they each have $250K of FDIC insurance. The only bank that I’m positive offers true trust accounts is Enterprise.

How should you report rent in property management accounting?

Kristin Johnson: If a tenant pays early, it's considered prepaid rent. It needs to stay booked as prepaid rent until it gets actually booked against the rent charge, and only then should the funds be made available to the owner.

I know that some property managers use it to pay bills. But technically, it’s a liability until it's actually earned, so it should not be used to pay bills, and it should not be distributed to the owner. Those are funds that belong to the renters until there's an actual rent charge booked against them. That's piece number one to understand.

Then, getting to the end-of-year side of it, the IRS does lay out that prepaid rent is taxable in the year that it is collected. So it should be reported as part of the 1099 income.

What is the purpose of clearing accounts in property management?

Kristin Johnson: The clearing account really serves as an intermediary while the security deposit funds are essentially in transit.

When we're getting ready to move out a tenant, those funds get released from the holding account, and it goes into the clearing account where we are booking, say, cleaning against it or whatever move-out charges need to go against it before we do a final distribution to the tenant. So it's just kind of a quick intermediary place where it sits very temporarily before the security deposit gets released and then distributed.

Who is responsible for sales tax in property management?

Kristin Johnson: Well, it depends on the function of the sales tax. There are a couple of different instances where sales tax comes into place. For example, New Mexico is a sales-tax-on-services state. Everybody is responsible for sales tax, meaning if it's a management fee, the owner is responsible for the sales tax. If it's a tenant fee, the tenant is responsible for paying the sales tax. Ultimately, the PM is responsible for gathering that sales tax and remitting it to the state.

There are some states where rent is taxable. Similarly, in those states, the owner is ultimately responsible for the sales tax. But many times, the PM will collect the sales tax from the tenant and pay it to the state on the owner's behalf.

A lot of times, what we'll see is, for example, the rent may be a thousand dollars, and the state says we need 7% of that. So you would tack an additional 7% onto the rent. The tenant would pay the thousand dollars plus the 7%, which would come into a liability or holding account on the ledger. Then a lot of times, the PM would pay that to the state on behalf of the owner.

What should be the frequency of record keeping in property management?

Kristin Johnson: “Money in should be accounted for immediately as received. States will usually dictate how quickly receipts have to be deposited, but our recommendation is that they always get deposited same day with the bank or as soon as practical thereafter.

As far as record-keeping to the owner goes, most states actually mandate that at least monthly reporting happens to the owner.

Certainly, in trust accounting, record keeping should be looked at daily, weekly, and monthly to make sure that it's staying in line. Soft reconciliation should be happening at least weekly, if not daily, to ensure that all of the money is fully accounted for and that you're not going to have any issues when you're closing out the end of the month.

Why would a property management firm use classes in accounting software?

Kristin Johnson: Classes could be done by various categorizations: single family, multifamily, commercial – in other words, the type of property that you're managing if you wanted to keep records that way.

We always used classes in our company because we were in seven markets, and so we would use classes per market. If I wanted to track my Farmington location or my Denver location, or my Charlotte location, I had all of my income and expenses broken down in classes by location.

It could be location, it could be property class type, really whatever kind of granular level you want to dive down and break out could be done by classes.

Do PMs set up owners as vendors in accounting software?

Kristin Johnson: If you're working in a true property management software, owners will be set up as owners, and you would do owner distributions to them as owners.

It's possible that if someone's not using a trust accounting platform – if they're using something like QuickBooks – then probably yes, you would have them set up as vendors.

But if you're managing a true trust accounting software, I don't ever recommend setting up owners as vendors. It kind of convolutes end-of-year reporting. You have to issue 1099s to your owners, and you have to issue 1099s to vendors. If you have them set up both as an owner and as a vendor, you're theoretically sending out two different 1099s – which wouldn’t necessarily be proper.

How much should a property management company spend on accounting?

Kristin Johnson: Accounting is one thing in property management that you don't want to skimp on. The most important function of a property manager is to be a good steward of other people's money.

I don't know that there's a range, but I will say that it very well may end up being your largest expense. But worth the money.

Conclusion

The software you choose for property management accounting can significantly streamline your operations and contribute to the growth and success of your business. Each option has its strengths and potential drawbacks, so it's vital to select a solution that fits your unique needs and portfolio size.

By equipping yourself with the right tools, you can streamline your accounting processes, ensure accuracy and compliance, and ultimately, drive your property management business toward greater success.

If you want to get more input on your property management software, check out our Triple Win PM Community on Facebook. Or, see more of our studies on property management best practices and services like our Resident Benefits Package.

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Operational Efficiency

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How to Build the Perfect Property Management Tech Stack

Building a property management tech stack takes an understanding of your needs, your options, how your team will use tech, and a commitment to continuous improvement. Technology, as most people know, is a double-edged sword. When used correctly, it can optimize business processes and create more efficient systems within your business. When used incorrectly, it can tear a hole in the space-time continuum, and you don’t want that. Industries all over the world have been going through their own tech revolutions over the last 40 years, and property management’s really began in the 80s with Yardi's "Basic Property Management" software. Online listings really took off in the early 2000s, and. Now, PropTech is everywhere, and the use of tech in property management has never had more potential or been more complicated. So how do you build a tech stack that works for you and your employees? Meet Rhianna Campbell and Kelli Segretto, two property management consultants that combine to boast more than 35 years of property management experience. Both have been through more than their share of tech rollouts. They’ve seen what works and what doesn’t, and they’re here to share with you what a good process for building a tech stack actually looks like. Start from the problem Technology will help you button up inefficiencies, but tech itself can create inefficiencies if it’s implemented for its own sake, which is one of the most common mistakes PMs make when at the top of the tech funnel. “Start with your issues list,” says Kelli Segretto, Founder of K Segretto Consulting and 20-year veteran of property management. “A lot of times what I see is a property manager will go to a convention and they’ll meet with a lot of different vendors, and they’ll come home with five new things they want to implement tomorrow.” There’s something of a FOMO effect with tech as it’s viewed as innately progressive, but tech is only progressive on a case by case basis. It will only help you so long as it solves a problem for you. You have to spend the time to identify what problems exist in your business before you start searching for solutions, lest you find yourself putting the cart before the horse. “You really have to dive into your issues list,” continues Segretto. “Realize what your biggest need is first and choose technology that matches that need. Talk to your fellow PMs, join these mastermind groups, attend Triple Win LIVE events, network on Facebook, and talk to other people to find out what’s working for them.’ Segretto really stresses the importance of doing your homework, because there is a tremendous amount of money and effort that goes into a technology implementation, and the worst thing you can do is go through all of that for little to no benefit. The biggest mistake PMs make when trying to build a useful tech stack is just collecting as many programs as possible and trying to jump directly into a fully functional stack instead of identifying solutions and rolling them out strategically. “We really need to be strategic about how we onboard because how many of you want to onboard new technology today and then decide in a year that it’s the wrong one and change? None of you think that’s a good idea. It costs a lot of money. It takes a lot of effort,” says Segretto Segretto’s issue list template is something she works through with her clients. If you're interested in a professional consulting session to help create an issue/action plan for your PMC, you can schedule a call with K Segretto Consulting here. How do you compile an issue list? “I talk to every single employee and find out what their biggest challenges are,” says Rhianna Campbell, a property management consultant and former CEO with over 15 years of experience in the industry. “I love to hear directly from the people who are working face to face with residents and clients and find out what some of their challenges are in the way that they do things on a day to day basis. And then from there, you can really pull out some of the commonalities that everyone seems to be having.” Campbell goes on to clarify that your issues list that you compile from these conversations gives you a clear cut list of questions you can ask software vendors when investigating solutions. “You can say ‘these are a list of my challenges. Can you walk me through how this software can help me solve these problems?’ And that’s a more direct approach versus being sold all the features that you may not even use.” When vetting specific technologies, Segretto suggests asking for a sandbox instead of just a demo. “Ask for a sandbox to where you can actually play with it, manipulate it, break it, find where those weaknesses are in that software before you commit to it.” Segretto also recommends seeking referrals to users who have used the software successfully and who have tried the software and either passed on it or gotten rid of it. Being able to understand those different perspectives will help you see a more complete picture of who the software is for, where it excels, and where it may come up short. Implementation Once you’ve identified which proptech vendors you want to work with, it’s time to enter the implementation phase. This is where most people’s fears reside. “I’ve seen hundreds of businesses launch technology across the nation and helped them implement. Ones that tend to fail are the ones that are not prepared,” says Segretto. “What I mean by not prepared is they don’t have their team’s buy-in. They don’t even know what they really want the technology for. They just feel like they want it and they want it right now. They’re not willing to dedicate a resource or a person that’s going to own it. Without that ownership, tech stacks fail.” The biggest parts of a successful implementation are team prep, ownership, and monitoring. Team Prep Getting buy-in from your team is critical for any implementation. The people that are using the tech need to believe in and understand the tech. Nothing guarantees failure more than just throwing a new service at someone. Explaining and training are the two big words here (it’s neat that they rhyme). Make sure your team knows why you’re doing this and how to use it. “You’re prepping your team, you’re talking about it, and you’re giving those ‘why statements’ so that everyone is on board before you launch. All of that needs to happen in your pre-implementation,” says Segretto Define Ownership Segretto believes it’s critical to identify who in the company will own the technology rollout. A tech rollout is just like any other undertaking in your business in the sense that it needs a central point of leadership to understand and manage all the processes of it. “You then have to pick a designated person who's going to be the owner of that technology. Then as you implement, they're going to be the expert, and they need to have time during that pre phase to become an expert, to get the training, to know the tool so that when questions happen in your office, your team members have a point of contact in office who's going to be able to either give them the answer or find them the answer.” Monitoring “It’s never set it and forget it,” says Segetto regarding the upkeep of a tech stack. “That would be cool, but that’s not reality. You need to be constantly monitoring its performance. I think that sometimes we tend to expect things will just keep working and we don’t really do the work we need to to monitor performance.” Campbell believes it’s helpful to monitor performance of tech that same way you would monitor performance of an employee. You need to conduct regular reviews of your tech’s performance much the same way you would of your team’s performance. Things change, companies grow, priorities shift. The same tech implemented the same way won’t necessarily be efficient forever. Tech audits are necessary to identify places where you can further optimize on a regular basis. After all, constant improvement should exist in any good business. “Being able to evaluate whether or not that technology is working is really important. I've seen a number of times where people buy into the tech and then don't use it. So really having points in time where you check to see if you're really utilizing that software that you paid a lot of money for, and not just spending money on it every month. And that can happen too. So just making sure that you are creating some opportunities to evaluate the performance of your technology to make sure that it's keeping up with the demands and the changes of your organization is so key.” Continuous Improvement The point of continuous monitoring is to promote continuous improvement. Tech evolves. It updates. Platforms overtake other platforms as the landscape changes. It pays to be aware, otherwise you can end up with less of a tech stack and more a tech pile, featuring redundant technologies, unused features, and wasted money and time. Getting the most out of your tech helps prevent these issues and keep your business efficient. Segretto, in her 20 years of property management, has seen companies go searching for tech solutions to problems they’ve already solved but were just unaware of. “Once you've identified how you're using it, then we start going on a treasure hunt to start looking for the hidden gems of what are the potentially overlooked features within my current tech stack.” Squeezing every drop out of your tech is a worthwhile endeavor. For every functionality you need that you can ID in your current stack, that’s one less rollout, one less training, one less process development you need to engage in. It’s a heck of a lot easier and cheaper than getting a whole new system. “How many of you would have time to stop and rebuild all of your processes every six months? Nobody? Yeah, it's impossible. And so instead of adding a new tool into that organization, what we did was we went back in and we maximized the utilization of that existing tool, which is a lot less expensive and a lot less cumbersome on the team than shifting entirely.” Tech is a good thing. Don’t let the length of this article about implementation scare you into thinking it’s more complex than it is. As long as you’re willing to manage your tech stack and make sure your team knows how to use it, you’re going to be in good shape. You wouldn’t bring on a new employee for no reason, so don’t add tech for no reason. Tech is a tool and its power is determined by the person who wields it. If you’re purposeful and thorough, you can vastly improve the efficiency of your business with the ever-growing field of PropTech companies in existence.

May 9, 2024

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How to Create a Rent Increase Letter that Provides Complete Transparency to Your Residents [Free Template]

As a property manager, navigating rent increases can be a delicate task, particularly at a time when the cost of living is rising all around. And while raising rent is a necessary part of maintaining a financially viable property, it's crucial to do so in a way that fosters trust and maintains positive relationships with your residents. The key to this process? Transparency. By clearly communicating the reasons behind the rent increase and providing all the necessary information, you can ensure your residents understand the rationale behind the decision and feel valued as part of your community. In the end, open communication fosters a sense of trust and respect between you and your residents. When residents understand the reasoning behind a rent increase, they're more likely to accept it and remain satisfied with their living situation. Additionally, a positive resident relationship translates to lower vacancy rates, reduced turnover costs, and a more stable income stream for your property. A note on language: Here at Second Nature, we prefer to use the terms "resident" and “residency” rather than “tenant” and “tenancy,” in order to emphasize the human element of property management work. However, there may be instances where terms such as "tenant" are used for legal or industry-standard purposes within documents or communications. In these cases, please know that our intent remains the same – to provide clear, accurate, and meaningful information to all people involved in the business relationship. Key elements of a transparent rent increase letter Here's what should be included in a rent increase letter to ensure your residents have all the information they need: 1. Resident information: Clearly state the names of the residents you're addressing. Include their address. Mention the end date of their current lease agreement. 2. Clear announcement of rent increase: Unequivocally state the effective date of the rent increase. Clearly outline the new monthly rent amount. If applicable, mention any changes to additional fees like pet rent, parking, or utilities. 3. Justification for the increase (transparency is key!): Highlight specific reasons for the rent increase. This could include rising property taxes, increased maintenance costs due to inflation or repairs, market value adjustments based on comparable rentals, or significant property improvements you've made. Be specific and provide data or evidence to support your claims whenever possible. For instance, mention the percentage increase in real estate property taxes or highlight the specific property improvements that are enhancing the resident's living experience. 4. Resident options (maintain a positive tone): Briefly remind residents of their right to review their new lease agreement. Express your willingness to answer any questions they may have regarding the rent increase. Clearly state your contact information (phone number and email address) for easy communication. How to send a rent increase letter Delivering a rent increase letter requires a balance between convenience and ensuring you have verifiable proof of the notification. First and foremost, you’ll need to consider local regulations. Ideally, consult with a lawyer specializing in landlord-tenant law to determine the mandated method for delivering rent increase notices. Some states or municipalities may require certified mail or another verifiable method (e.g., signed delivery receipts with regular mail). Don't skip this step – non-compliance with local regulations can lead to legal issues down the line. Delivery method options Certified mail: This is generally the safest option. Certified mail provides a receipt confirming the letter's delivery and the date it was received. This documentation can be crucial in case of future disputes or legal proceedings. It is typically more expensive than regular mail, but the added security it offers can be worth the cost. Regular mail with signed delivery receipt: This option offers some level of proof of delivery but may be less secure than certified mail. Residents can potentially refuse to sign for the receipt. Hand delivery: If feasible, handing the rent increase letter to the resident in person and obtaining a signed receipt is the most secure method. Note that while some residents might appreciate the convenience of email, this is not always the most reliable notification method. Consider your residents' demographics and preferred communication channels. In any case, the original lease agreement you have with your residents should explicitly state acceptable methods for delivering important notice letters, including rent increases. For instance, if lease terms include email as an acceptable form of communication, then you may choose to use it for rent increase notifications. A note on property management software Property management software can be useful for maintaining a centralized repository of all your communications with residents, including rent increase letters. It is also a useful tool for furnishing clear audit trails and documentation in case of disputes. Do, however, remember to make updates if the software handles rent collection reminders, in order to reflect the conditions of your new rental agreement. Rent increase FAQs Q: How many days’ notice of rent increase do residents need to be given? A: The required notice period for a rental increase can vary depending on your location and the terms of your lease agreement. In general, most states require that residents be given 30 to 60 days' written notice before a rent increase takes effect (this can vary for year-to-year lease renewals vs month-to-month). It's important to check local rent control regulations for specific details on timeframes. Q: Can the rent increase be contested? A: Depending on your location and specific circumstances, residents may have the right to contest a rent increase. For example, rent control laws in some jurisdictions allow residents to challenge rent hikes that are deemed to be excessive (statewide in California and Oregon, or locally in New York, New Jersey, and Maine). It's best to obtain legal advice from lawyers specializing in applicable local laws and state laws to understand your options. Q: What resources are available for residents? For residents who ask about their rights or renting in general, here are some resources you can provide: HUD Tenant Rights: The U.S. Department of Housing and Urban Development (HUD) website offers a wealth of information on tenant rights, including resources on rent increases and eviction processes. Local tenant rights organizations: Many cities and states have local tenant rights organizations that can provide residents with specific guidance and support for renters based on their location and situation. Sample rent increase letter template Below is a template you can use for your rent increase letter. Simply customize the highlighted sections with your specific information. [Your Property Name and Contact Information] [Date] [Resident names] [Address of rental property] RE: Rent increase effective [effective date] Dear [Resident names], This letter is to inform you of an upcoming rent increase for [property address], effective [effective date]. Your current monthly rent of [current rent amount] will be adjusted to [new rent amount]. Additionally, [mention any changes to additional fees, e.g., "the monthly pet fee will increase to $XX"]. We understand rent increases can be disruptive, and we want to be transparent about the reasons behind this adjustment. The increase is necessary due to [list specific reasons for the increase, e.g., "rising rental rates for comparable units… ," “neighborhood revitalization resulting in enhanced value…”]. [If applicable, provide data or evidence to support your claims]. We value you as a resident and appreciate our relationship. You have the right to review your lease agreement if you have any questions about its terms. We are also happy to answer any questions you may have regarding this rent increase. Please feel free to contact us at [phone number] or [email address]. Sincerely, [Your name and the name of your property management company] Final thoughts Prioritize clear communication and transparency, and you’ll find you can navigate rent increases constructively, while ensuring a healthy and positive relationship with your residents. Such communications are a unique opportunity for positioning with your residents by reconnecting on terms, updating expectations, and more. The way you compose these letters – and the way you position the changes – can make all the difference in your renewal rate and resident satisfaction. It’s also the perfect opportunity to introduce a Resident Benefits Package (RBP) and remind residents of your role in adding value to their living conditions. Learn more about the benefits of Second Nature’s fully managed RBP.

May 7, 2024

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