Managing legal documents is at the core of running a successful rental property business. However, keeping track of all your documents is challenging.
Even if you only have a few units, there can be a mountain of paperwork to manage. Everything from lease agreements to tenant repair requests and simple rent receipts all require secure storage.
Traditionally, storing paperwork was a mammoth task. A landlord would need a few storage cabinets; equipment such as a printer, fax, and photocopier; and a robust filing system. All of this took time, resources, staff, and plenty of space to organize and manage.
However, with advances in technology, there are plenty of digital solutions that today’s landlords can use. Using mobile rental apps or online software gives landlords the tools necessary to streamline a rental business. Many of the best property management apps have features to manage a wide array of legal documents.
Of course, switching to online document storage can be a daunting task. Suppose you’ve always dealt with paper documents. In that case, you may have concerns about digital storage, online security, e-signatures, and legal issues. However, in many respects, managing legal documents online is easier and more secure than storing hard copies.
Being a landlord can be fun—if you do it right
No matter how great you are at finding good rental property deals, you could lose everything if you don’t manage your properties correctly. Being a landlord doesn’t have to mean middle-of-the-night phone calls, costly evictions, or daily frustrations with ungrateful tenants.
Essential features of document management software
Before switching to online document management, it’s crucial to get a property management app that suits your business. Most rental apps facilitate online rent collection, security deposits, and even maintenance requests. However, if you want to manage legal documents, you will need something more.
What should you look for in a rental app if you want to manage legal documents?
- Security. The app or online software must have encryption to prevent unauthorized access to your files. Think of this as a safe that only you or authorized persons have the combination to.
- Capability. You need to choose an app that can manage the types of documents you need. For example, you probably want to get tenants to complete rental agreements and digitally sign documents. But what about other legal documents such as tenant repair requests, rent payment plans, or maintenance reports?
The benefits of property management apps
If you’re a landlord, why should you make the switch to digital documents? As an example, let’s look at the most popular type of electronic document landlords use—the rental agreement.
There are a few ways why digital lease agreements are better than paper ones.
- Accuracy. There are no issues with illegible handwriting, spelling errors, or missed fields. Also, essential information can automatically appear on other documents.
- Security. Digital signatures are more secure than handwritten ones as they are more difficult to forge.
- Cost. It is easy to add or delete clauses to leases depending on your needs, rather than printing out entirely new ones. You also save money on paper and ink, not to mention transportation costs to meet the tenant.
- Speed. Sending electronic documents by email is faster and more secure than mailing. You don’t have to meet with tenants and they can review the agreement on their own time.
- Storage. Lease agreements are stored in a secure online environment. This means that you always have access to your files, whether at the office or working from home.
The advantages of electronic rental agreements are also the same for any legal document in digital format. All data is validated to make sure it’s accurate. Completed forms can be emailed, printed, and retrieved from secure cloud storage.
Legal electronic signatures
Electronic signatures, or e-signing, are the key to using legal documents online. E-signed documents are legal documents and are just as valid as a handwritten signature. In the U.S., the Electronic Signature in Global and National Commerce Act of 2000 (E-SIGN) ensures that e-signed documents are legal.
Secure storage solutions
One excellent reason for storing legal documents digitally is that they are always at hand. Suppose that you’re out of the office or it’s the weekend. However, you need to check a rental agreement regarding one of your units. If you have paper documents, you’d either have to make a trip to the office or wait until Monday.
If you have legal documents online, they are always available. Additionally, you can grant access to any employees that need to check the records.
Long-term document history
File management is another way that technology can help manage legal documents. For example, it’s possible to access all documents related to a specific unit, tenant, or property. This function gives you greater insight into your business operations.
Here’s an example. Let’s say that you get a repair request from a tenant because the stove is broken. However, you seem to remember a similar request from the same unit. In that case, it’s easy to check your maintenance records for that unit. You may realize that the stove was replaced the previous year. This can help determine if the fault is due to old equipment or a tenant’s misuse.
One of the many benefits of using digital legal documents is customization. Many property management apps that manage documents allow you to include custom fields. This feature is ideal if you have rental units with specific requirements.
Easier onboarding for new residents
Processing rental documents online also saves time when new residents move into a property. There may be several forms and agreements for each tenant. Rather than complete every document individually, you can propagate information across all the forms. This could include names, previous addresses, rent amount, and social security numbers.
For example, this can save time if you have to complete a rental agreement, a pet agreement, cosigner agreement, security deposit notice, flexible rent payment plan, or other documents.
Switching to digital legal documents is a great way for landlords to run a successful rental business more efficiently. Various tech solutions allow secure cloud storage and 24/7 access for legal documents. Your tenants will also benefit when you start using digital lease agreements as they can access their rental documents at any time.
More on landlording from BiggerPockets
Whether you’re looking to systematize your rental business, want help with tenant screening or property management, or have any other interest in and around managing rental properties, the articles below are designed to make you better at what you do.
Oh, and for a concise, well-organized read through the most important components of real estate investing and managing rental properties, you might check out these books, written by BiggerPockets’ very own Brandon Turner – The Book on Rental Property Investing and The Book on Managing Rental Properties.