How would you handle rental income

[Bianca G.]

Hello BP Family! When you rent your property how do you handle the rental income?

Do you open a seperate bank account for that and also how do you handle the security deposit?

Can someone please advise.

Thanks

[Joshua Fulenwider]

You want to open a separate account for a couple of reasons.  First is that it will be very difficult to track income and expenses when it comes time for taxes if you are running it through your personal account.  Second, and possibly more important, is that if there is a co-mingling of funds if you were to get sued they could potentially go after everything in your rental account.  If that includes your personal money it goes too.

When I managed my own properties I held the security deposits in a separate savings account.  It was tempting during tight months to touch that money but I never did because when it came time to return it to the tenants or use it to cover repairs that the tenants caused I wanted to have  it immediately available.

Anyway, that's my own personally views on it.