Business Bank Account Factors

[David Rodick]

I'm about to open my first business accounts for general real estate investing (wholesaling, flipping, buy and hold, private investing). What are important factors to consider when comparing my options (especially that I'm not thinking of)?

Some I thought of so far:

1. Small banks to build relationships 
2. Rewards cards/packages
3. Interest rates
4. Merchant Services Account Rates (or should I use a payment processing company?)

Thank you all in advance! :)

[David M.]

@David Rodick

Yup, it all depends.

Just to give another two cents... Sounds like you are going "slow." Maybe after you get your wholesaling going, make a LLC for flips either once you start or after your first one or two. I personally don't believe its the end of the world to have some overlap in your liability. I wouldn't have a long term rental sitting with your short term stuff for long, however. You normally want to separate the long term and short term. I know you want the simplicity (so do I), but I just wanted to mention that even for flips some recommend separating those as well. You don't know if a flip you did a year or more before comes back with a lawsuit for some reason. But, I figure if I don't somehow keep much equity/assets in the LLC, then it doesn't matter since I won't lose much.

Merchant services are just to accept credit cards to my knowledge.  So, you don't really need it unless you plan on taking credit cards.  If YOU want to pay for something with a credit card, then just apply for a business credit card --- it has nothing to do with merchant services.  I wouldn't recommend accepting credit card payments since the payer could always do a call back and you'd be stuck fighting for the money.  Wholesaling you might take a personal check for payment, but for a flipping it'd definitely be bank check or wire transfer out of closing/escrow.  The point is, when would you be a like a retail store needing to accept credit cards?

Do you plan on doing lots of financing?  Will a hard money or traditional lender do?  Or will it be more specialized requiring a local bank?  Just saying since if you don't want to work with a local bank, you don't have to.  I bank with a major bank and all my checking accounts are there.  Its much more convenient with my online banking and my mobile banking (well, things may have changed in the past decade or so, especially after COVID19).  

As for reward cards, nothing says you have to use only ONE bank for your business.  I have my bank accounts with one bank but my credit cards (personal and business) with another bank because I prefer their reward program.

Do I need to comment on interest rates?  What bank gives you any appreciable interest on your deposits nowadays...

Make any sense?