Separate bank accounts

[Dennis Kelly]

I'm curious about a financial decision to make . My real estate investing is not a business , I just use all my left over cash for my deals and expenses . Do you recommend keeping a separate bank account for all my rentals and the occasional flip to keep all my real estate money in one place ?

[Account Closed]

There are definitely a few benefits to keeping them separate, and potentially legal implications depending on where you invest:

1. Opening a separate account for security deposits will ensure that there's no chance of them being spent - this is the one that might be legally required as well.
2. Keeping a separate "operating account", even if you're not a business, can absolutely help you keep the two sides of your finances apart and more accurately track income vs. expenses and the reserve level that you have for the properties.

Theoretically, if you're using a very detailed budgeting/outflow tracking application or scheme, you could make the operating account unnecessary...but it's a very small action that will help you simplify things greatly, especially around tax time.