Files too large

[Mark Forest]

I have several houses now and my filing cabinets are getting a little stuffed. I have a separate accordion folder for each house. I keep the original purchase papers, receipts for repairs, credit reports for prospective tenants and the signed leases when I get a tenant, insurance contracts, city inspection forms, and property tax documents. My files are all quite fat and it is difficult to open the drawers to see the file tabs.

What do those of you who have 20 or more houses do? What do you keep? What do you pitch? Is it all in several filing cabinets? My office is not that large. Please help me be more efficient. Thank you in advance for any suggetsions.

[Jeff S.]

Almost two years ago, I made the one and only New Year's resolution I ever kept. I had a Cannon multi-purpose printer/scanner, bought a mobile Neat scanner, and resolved to go paperless. It's been life changing. Never have I felt so organized or had as much control over our finances.

As soon as I get a receipt, I immediately write its purpose on the front or back. If I wait a day to do this, there's no way that I'll remember what it was for. In the case of deductible meals, I’ll note the attendees and business purpose of the expense on the back and anything else that’s relevant. Understand, the IRS will accept copies of receipts. Also, have you looked at a four year old Home Depot receipt? They're often faded or blank.

I almost always have my laptop and scanner with me now wherever I go. It's only about the size of a long toothpaste box. When I get a few minutes, perhaps during office time, on a plane, or just watching TV, everything gets scanned, front and back (if necessary) as a PDF and put into a Dropbox folder.

I don’t use the Neat software because its proprietary and I can’t the see receipts offline or on my phone. For the same reason, I don’t scan receipts into Quickbooks. You'll want to kill yourself if the only gigantic file that you can't read without special software, containing years of receipts, gets corrupted.

Larger documents get scanned as PDF's with the auto feeder on my Cannon scanner. I also signed up for electronic bills from every utility, bank, and credit card company I do business with and save these too as PDF's.

Each PDF file is labeled with the date, the name, and the amount. For example:

14 11 06 Home Depot $142.87.pdf [Also annotated with the purpose & property(ies)]

I use classes in Quickbooks to allocate each expense over the relevant properties.

Using a year month day format keeps everything chronological. I experimented with different file systems but, believe it or not, I found it easiest just to keep all receipts in one directory. As long as I have a date, name, or amount, I can easily locate a receipt in no time by doing a Spotlight search on my Mac. It literally takes one second. Alternately, I could sort by date, name, or amount but never had to. Other documents, like notes or title insurance policies, get filed in property specific directories.

Documents with original signatures such as note, deeds of trust, or leases, also get scanned and then filed in a small two drawer fireproof cabinet that's not even close to being full. Everything else gets scanned and shredded. Everything. This was actually scary at first, but is now satisfying beyond belief. I also scan all incoming checks, bank deposit receipts, invoices, and tax deposits along with the payment forms. Thus, I always have a pdf record of who has paid me, whom I paid, and why.

The other best part is that our office is now super-clean and unused enough that we will soon reclaim it as a guest bedroom. My wife has been shopping for furniture.

Gee, maybe this wasn't a good idea :-)