Rent Roll vs Bank Statement: Where the Gap Between Rent Due and Rent Collected Comes From in an Apartment Building

What is the difference between an apartment building's rent roll and its bank statement?

A rent roll lists what every unit owes for the month. A bank statement lists what was actually deposited. The first is rent due, the second is rent received.

This match is the first monthly step in apartment building bookkeeping. What the rent roll contains, column by column, is in what a rent roll is.

Why does an apartment building's rent roll not match the bank?

Because some rent that was due did not arrive. The usual causes are vacant units, tenants who paid late, and move-in specials or credits that lowered what a tenant paid.

• Vacant units. The roll carries their rent as what the unit would earn; nobody pays it.
• Late rent. The tenant owes it this month and pays it next month, or not at all.
• Move-in specials and credits. The lease says one rent; the tenant pays less this month by agreement.

The 3 add up to most gaps. The rest are in the list further down.

How do you match an apartment building's rent roll to the bank statement?

Total the rent roll. Total the rent deposits in the bank. Subtract. Then list each unit that paid less than it owed, with the reason, until the list equals the gap.

1. 1Total the rent roll. At Oak St, 12 units at $1,450 is $17,400.
2. 2Total the rent deposits on the bank statement. At Oak St, $14,200.
3. 3Subtract. The gap is $3,200.
4. 4List each unit that paid less than it owed, with the reason: vacant, late, a special or a credit.
5. 5Stop when the list equals the gap. If it does not, a payment is in the wrong month or the wrong account.

Oak St, one month, invented data

The list equals the gap, so the month is tied out. We run these 5 steps every month.

How is a vacant apartment unit shown in the gap?

A vacant unit owes nothing, so its market rent is shown as vacancy loss. It explains part of the gap without being money anyone owes.

At Oak St the vacant unit explains $1,450 of the gap. That is rent the building did not earn this month because the unit was empty. Vacant units and specials together are measured as economic vacancy.

How are late rent and late fees recorded in an apartment building's books?

Late rent stays on the unit's balance as money owed until it is paid. A late fee is recorded as its own income line when collected, never as rent.

At Oak St one unit paid nothing this month. Its $1,450 stays on the unit's balance as money owed. The next month it pays the $1,450 with a $75 late fee. Here are the entries under accrual books, where rent is recorded when it is due.

Late rent at Oak St, invented data

Under cash books, nothing is recorded until the money arrives. The rent roll still shows the unit owes $1,450, which is why the roll and the bank differ. Cash or accrual, the late fee is recorded when it is collected. It is its own income line, never rent, so rent on the books keeps matching the rent roll.

Whether a late fee may be charged, and how much, is a legal question for your attorney. When late rent will never arrive, it moves to unpaid rent, evictions and write-offs.

How are move-in specials and rent concessions recorded in an apartment building's books?

Record the full rent, then the special as a separate concession line. The net is what the tenant pays, and the books still show what the special cost.

At Oak St a new lease came with $300 off the first month. The lease rent is $1,450. The tenant paid $1,150.

Move-in special at Oak St, invented data

Recorded this way, the rent roll still matches rent income, and the concession line shows what the specials cost the building over a year. Recorded as $1,150 of rent, that cost disappears.

What else can open a gap between an apartment building's rent roll and the bank?

Rent paid early, a deposit banked with the rent, a fee taken out before the deposit, a payment that cleared after month end, and a returned payment.

• Rent paid early. Next month's rent lands in this month's bank. It is prepaid rent, not this month's income.
• A security deposit banked with the rent. The deposit is owed back and belongs in the deposit account, not in rent.
• A fee taken before the deposit. Your manager collected the full rent and sent you rent less the fee.
• Timing. A payment collected on the last day of the month cleared the bank on the 2nd.
• A returned payment. The deposit went in, then came back out when the payment bounced.

How often should an apartment building's rent roll be matched to the bank?

Every month, after the bank statement closes. A gap named in the same month takes minutes. A gap left for a year cannot be explained.

1. 1When the bank statement closes, pull the rent roll for the same month.
2. 2Run the 5 steps above and write the gap list.
3. 3Give every line a next step, such as a call to the tenant about unpaid rent.
4. 4Carry the open lines to next month and check they clear.

Once rent is tied out, the rest of the account is checked in bank reconciliation for an apartment building.