Seperate bank accounts for each propertty LLC structure finances?

[Kevin Q.]

I'm currently looking at the best way to handle managing properties.  I currently use Buildium and quickbooks  four about 25 units, but recently I've put these properties into their own llc's for protection and ease of buying and selling and while tracking finances isn't bad now, when the number of properties and units gets in the thousands, I'm thinking it might be hard.  How do you guys/girls out there handle large amounts of properties?  Do you have a separate bank account for each? Do you use your own management company that pays expenses and collects rent and flow through a net amount each month?  I would like to have a solid method in place before I start to scale this.

[Andrew Cushman]

@Kevin Q., we've acquired about 1,600 units, with the property size ranging from 56 units to 348 units.  Here's what has been very effective for us:

1. Each property has it's own LLC and bank accounts that are reserved for that property. No other funds, either personal or from another business, ever enters or leaves these accounts.

2.  Third party property management handles all of the daily transactions - collecting rent, paying bills, accounting reports, etc.

3. For the money that flows to us (i.e. that leaves the property and comes to us in the form of fees or distributions), it all comes to one managing LLC. That is where we use Quickbooks classes, as @Jeff B. mentioned.  That allows us to have all the fees/distributions flow to one entity, but by assigning a class to each property we can always track our income from each property.

If you have a collection of much smaller properties, bank accounts for each property would be a lot to track and probably not necessary. You may want to have a managing LLC that handles all of the transactions & bank accounts, and track each property with QB classes. Setting up a series LLC may also simplify things.

Part of it is just your tolerance for hassle, and balancing that with your tolerance for risk :-)

Andrew