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Updated about 6 years ago,
How to Handle Business Banking / Bookkeeping?
Hi there!
I'm a new REI and am closing on my first rental property (a SFH) today. I'm also closing on another in a few weeks. I'm planning to acquire 20 properties over the next year and a half or so and have funds set aside for it.
The properties I'm purchasing are all turn-key, and all have tenants in place and are post-rehab.
I'm financing these properties at 20% - 25% each, 10 will be in my name, and 10 in my wife's name. My plan is to take all cash flow from the properties and use it to aggressively pay down the loan with the least balance, eventually owning them all free-and-clear.
With that said, I'd like to structure this in as simple a way as possible. Right now, I'm only purchasing homes in Indianapolis, so I created an LLC in Indiana for holding properties. I live in CA. I went ahead and created a business checking account for the LLC, and my goal is to keep the expenses/revenues/etc. as separate from my personal as possible to make things easy to track (and for tax time).
Here are my questions:
- What sort of software should I be using to keep track of these properties? Right now I have everything in a spreadsheet, but that seems like it won't scale very well and might become a lot of work. All of these properties will be under one property manager (so far), if that makes a difference.
- Even though these houses will be in my name or my wife's name (and not the business), can I pay for expenses from my business account and treat the homes like business assets, even though I'm technically the owner and not the business?
- Should I attempt to transfer the title of the homes into the company's name after the loans are seasoned? Or is this a bad idea? I know that a bank can call the note if this happens, but I'm wondering what other people do.
- Should I find a bookkeeper to help keep track of expenses in the business (repairs, etc.)? Or is this something the property manager will typically do, since they're tracking those things anyway? My current PM uses AppFolio, if that makes a difference.
Thank you for the guidance!