Separate Bank Accounts for Property Income/Expenses?

Question

So I'm still in the learning process of real estate investing and this question randomly came to me. For those of you who currently have property and have (rental) income generating from it, do you have separate bank accounts for the income/expenses on those properties? I imagine everyone has their own personal checking and savings and was wondering if people have any additional accounts for these. Especially if your real estate investments/business are not your full-time job. And regardless of the answer, what is your reasoning for doing things the way you do in regards to your accounts? And an additional question if anyone just does it through their normal accounts, how do you keep track of the expenses and things like capex reserves on your properties?

Lastly, what should a new investor consider when deciding how to set up their accounts? I know it'll depend on everyone's own situation but any aspects I can look at, especially if they're not immediately obvious, would be useful to know.

Cody Benedetto · Answer

I highly recommend separate accounts. I have a separate checking account for each of my properties where I manage their finances. For the one that I self-manage, I also have a separate interest money market account where I hold the security deposit (if you use a property manager, they often manage this). Even if you have a property management company, it's worth isolating a checking account to keep things in order. Best of luck!

Steve Vaughan · Answer

I would at least have a checking and savings acct for rentals separate from your main household accts.

One for each house sounds excessive. I have one per entity for my commercial assets, but starting out with 1 on up to a handful of houses, one checking and savings acct would suffice I would think. Then track each property wth a spreadsheet or simple PM software.

Cody Benedetto · Answer

@Carl Flint not that I’m aware of, I’d talk to your bank and tell them specifically what you need your accounts for. They should advise on what accounts are best to use for rental income/expenses.

Mel Sims · Answer

Never mix personal accounts with rental accounts. Plus, it'll be easier for your tax purposes for you CPA.

Nicholas Earls · Answer

Comingling of personal and business funds is a big no no. Definitely want to separate those. Strongly consider a separate credit card for your business transactions as well.

Simon W. · Answer

there's literally hundreds of posts asking the same thing you are asking. Practically everyday someone is asking this question.

Scott McWilliams · Answer

Get a separate account. It will be so much easier to show the status of the security deposit if that ever comes into question. Also it makes tracking expenses for tax filing so much easier. Get a debit card for the account.

Bjorn Ahlblad · Answer

I use separate bank accounts and CC's that way the bank does my accounting and year end work.

Carl Flint · Answer

@Cody Benedetto

Is there a limit to how many accounts you can have open with the same bank?

Andrew Rogers · Answer

I appreciate all the responses everyone! I'll definitely have to look more into how I should set these up for myself.

Separate Bank Accounts for Property Income/Expenses?

Separate Bank Accounts for Property Income/Expenses?

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