To escrow or not to escrow?

[Tone Church]

I'm in the middle of two refinances. Optional escrow. I'm curious how you all view escrow for taxes / insurance. I have about $22,000 a year that would be put in escrow. I would like to instead hold that money in either a high interest savings account or otherwise very secure liquid investment. Does anyone have any thoughts about this or experience with this? I currently own three properties. 

[Peter Mckernan]

Hey @Tone Church Great question about the impound accounts. It's up to you on that for the work that you need to do for not having the impound accounts. To have the accounts setup they are basically a forced savings for you and you do not get too far away from spending all the money that you have for those expenses which can be large impacts at the same time.

If you are good at accounting for it and making sure you have enough in reserves for it, that is great. The downside is that if you plan to buy more rentals, property, and investments it gets to be very cumbersome juggling all those payments. Granted, you can setup the taxes to be paid all at once within a year and the same for the insurance; however, some people are not that disciplined and two the increased transactions just for an investor growing their business can bog them down.

Side note: All services are not created equal and are not all great and keeping up with taxes & insurance costs. Sometimes you may get a check in the mail for more money (miscalculation), and sometimes you have to pay a little extra (miscalculation). This is all at the fault of the service of the loan/account. That has happened to me on both ends of the spectrum, actually just got a check this year from a property I sold back in 2016.