So I purchased a multi family off of a landlord who has been in the business for 20+ years and currently owns over 100+ doors (veteran). My question is this... When I bought the property from him he was nice enough to have me over his home (we live in the same town) and BS about real estate investing. As he was showing me his portfolio and how he cash flows in different areas of the state, he showed me a record of all the tenant checks he copied and filed. I didn't think to ask him at the time, but is it necessary to make a copy of each check you receive from each of your tenants? Is there some benefit to this whether it be paper copy or computer scan? I have an excel spread sheet for each property that I own and as the checks come in I record the payment as paid on the spreadsheet and then deposit the money, but do not make any type of copy of the actual check. Would there be any reason at all to copy the check and keep it for your records? Thoughts much appreciated...
@Robert Sapienza I am fairly new to landlording as well (just purchased in mid-September) but my thoughts on why you should always make a copy of the actual check is to protect yourself if you have ANY type of rent dispute with a tenant down the road. Should you need to go to court, you have actual pictures of things to show a judge instead of just a spreadsheet that you record on. I don't know if that would ever happen, as I am new and haven't personally experienced any crazy rent stories yet, but I feel it is safer to OVER protect myself vs being under-protected for any type of dispute with a tenant.
@Robert Sapienza . Me thinks you met a Landlord who coveted pieces of paper, thinking it would CYA him with the tenants and IRS if needed.
Most major banks can provide you a copy of deposited check back for several years, if needed.
Personally, I do keep a Paper Copy of the Security Deposit Check in the file for each property. And a copy of each deposit / Invoice in a Excel Checkbook I maintain (small time operation). Definitely not a system that's workable for vast number of doors.
Otherwise, I have an EVEN Month Folder and an ODD Month Folder in which checks and statements are filed, and shredded the next EVEN or ODD month.
He's an old-school investor that started out before computers and scanners and Google Drive were created. That's the way he did it and he kept on doing it despite technology making things easier. It's not wrong but it's definitely not necessary or the best way.
Go back and ask him how many checks he copied and then ask him how many times he needed to use one of those copies to save his bacon.
I don't think it would hurt but he probably started doing it before you could access the check. Now days almost every bank will have a copy of the check on that month's statement. Most banks will also display it on the current transaction page of your online banking. If you do mobile deposit you could always just take an extra picture and save it to google drive or dropbox. But I really don't see a need for it. A judge would accept a bank statement just as much as he would a regular picture.