Personal or Business Bank Account

[Alex Orrson]

Hi all,

I'm pretty new to REI but have read a few of the BiggerPockets books. I'm looking to start with a buy and hold duplex in the next few months, and continue to scale up to higher unit multi-family properties in time.

I know that it's recommended to use a separate bank account for my real estate properties than my personal account. However, I'm not sure if this should be a separate account that is still in my personal name, or if this should be an account in the name of a business (I'd have to create an LLC for this). My long term plans are to continue to acquire properties so I will likely need an LLC eventually, but I was thinking it'd be best to create that after my 2nd or 3rd deal since my total risk will be lower until then.

Is it best to create this separate REI account in my personal name or in the name of a business?

As an additional question, I wanted to know how many bank accounts per property are recommended. From my readings online, I've heard suggestions to create up to 4 separate accounts per property.

1. Checking account

2. Savings account (for CapEx)

3. Account for Security deposits since they aren't the landlords money officially

4. A credit card account

I've also read suggestions to create separate accounts per property. Creating 4 accounts per property seems like a lot considering I'm looking to scale up, and I'd quickly have 10+ total accounts Is this something that you'd recommend? To have these 4 types of accounts for each individual property.

Thanks in advance!

[Kevin Sobilo]

@Alex Orrson, I started my LLC all my myself but I wouldn't recommend that for most people.

I believe my lawyer charges $700-800 to start an LLC for someone and I think that is reasonable. I'm sure that is on the cheaper side. I suspect the average is probably $1000-1250. I would make sure they not only file the LLC paperwork but also provide me with an operating agreement which lenders and other entities will request from you to show you are the person able to legally sign for the LLC. They should also get an EIN (Employer ID Number) from the Social Security Administration. You will need that to open bank accounts in the LLCs name.

Another advantage of using a lawyer is developing a relationship with a lawyer. You want someone you can ask questions to. So, find a local law office that specializes in real estate.