What is the best practice for organizing/storing all the paperwork involved in real estate? I have stacks and stacks of hardcopies and folders and folders of pdfs. It’s not working very well for me… How are you guys organizing everything? How long should I keep the paperwork for the purchase agreement, title, mortgage, and etc.?
I have to admit, I have paper files of all my tax returns (with receipts, etc) and I use those brownish, expandable folders with the flap closure and string rubber band to close for each tax year. Of course, more recently, with Turbo Tax usage and Excel/Word, things are saved electronically and PDF’d into yearly electronic folders. I still like to get my personal/rental utility bills via paper (I know, bad) but easier for me to track and pay online as they come in and I just gather them together at tax time. I agree, I tend to use more paper than most folks but it works for me.
Important docs are stored as PDFs. The PDFs are saved in google drive. Each property has it’s own folder hierarchy in google drive. This makes everything available via the cloud to wifey and me.
Hardcopies remained hardcopies unless necessary to convert to PDFs.
All digital copies are in emails, create a mailbox folder for each property (for keeping documents related to property only) and tenant subfolders (for keeping documents related to tenants only). Documents include conversational emails not just application forms, and contracts. Possible because my wife knew my email account password and my iCloud password
How many purchase agreements do you have?
I went through all my stuff recently. I had my W-2 statements from HS when I made a whole $3K for the year. I’d only keep the most recent refinance docs for each home. That’ll save a ton of paper.
You would better have a track of documents, like pdf documents, esp when you have rental and mortgages. IRS can officially audit or send a notice in last 3 years. When the notice comes, it will say you need to pay $xxxxx.xx and the burden of proof is left to the individual or pay the $xxxxx.xx ! When you do not have document, you will no way know what was the issue ! One time they sent a notice to $15000 and I was forced to refile with wash sale and paid zero additional !
I keep last 15 years tax records in pdf and hardcopy. Every year, after I file taxes, I staple physical copy with returns big bundle (around 300 pages), save it. Review after 4 or 5 years (means almost every year) and destroy the old physical copy. Still I will have pdf (named meaningfully) for 15 years.
You only need 7 years. Beyond that IRS can’t audit you.
What’s the point to keep the purchase agreement? Unless you plan to sue the seller.
The only purpose to save documents is for tax filing. If tax code can be simplified that most people do not need to file tax return, we don’t need to save much documents.
IIRC, for companies (form 1120) it is 7 years, but personal (form 1040) taxes, it is 3 years. However, if we have amortized for rental (say:roof replacement or Swimming Pool removal or …something 15 years), better to keep the records.
Since our personal data can be sold, and hackers are having fun with that alternative, anything PDF and so on can be wiped out from your computer or from the cloud.
My wife keeps a paper trail of anything. Including the $30K Steiff bear collection in case any fire so we can prove we had them in the house.
I don’t get why some of us would keep so many hard copies in the house. Which document must be in its original hard copy that a soft copy or a printed hard copy would not be able to replace?
I took the time to scan everything that I want to keep, then shred the hard copies. It takes some time initially (building the directory structure and coming up with file naming conventions) but once you get the flow going it’s quite convenient. Once stuff becomes soft copies there is no need to worry about having too much of it. I pay $99 a year for a dropbox 1TB cloud drive so I can store as much data as I want (most of which are pictures and videos, the size of actual documents is tiny compared to them).
One feature I would like to see (maybe it exists already, haven’t researched) is to do automatic OCR so the scanned docs become searchable. Right now it’s manual search for directory and file names if I want to find something. Hardcopies are equally non-searchable so my strategy does not make it worse.
Tons of apps. I use Scanner Pro because it works on iOS devices and can be shared in any popular cloud storage.
There’s no need to pay any money to store anything. Google drive gives you 15GB free. That’s enough space to store at least 1000 real estate transactions. Who here can say that they own at least a thousand homes?..
You have no videos? I have 200 GB iCloud storage, used 70 GB.
I meant only real estate… don’t think any video is required to record real estate transactions… or maybe you do… ???
All in one account regardless of subjects. You have a specific Google drive under another pseudonym?
I only have one google account. I store very little videos there
Get a fast scanner and create pdf files and store in the cloud. The law says 7 year storage is needed for transactions.
I would keep HUD1 statements, tax returns as long as possible. This is a $100+ investment.
I talked a realtor who has been in business for 40 years to dump his records that filled up his office. He is getting a cubical instead of a big office. It took two full truck loads to the shredding place.