Rent Money, How to you withdraw?

Question

When you receive your rent money, it goes into a specific account.  Do you write yourself a check, or just direct deposit it from that account a certain amount that you feel directly into your personal account?  What are the ramifications, issues, alerts people should watch out for.  Whats the proper process.

Nathan Gesner · Answer

I don't cash out funds. I keep everything in the account and allow it to grow for the next investment or property improvements. Your money grows much faster if you leave it alone.

Dan Moore · Answer

When I withdraw I just do a online bank transfer from my rental account to whatever account I need to. Sometimes for personal. Sometimes a transfer into another business. I don’t do small amounts routinely. Instead I will usually do $10,000 minimum. I just note them as capital withdrawals. Same for transfers in. My accountant does all the figuring out each year but they’ve never even questioned the transactions.

I know in my old business we had to do more work for distributions. We had to keep an eye on basis, make sure each owner had an equal distribution, and keep the banks happy with the amount of equity to asssets so there were outside concerns but for rental I’ve never had to worry about those things.

I wouldn’t say I’m following the “proper process” but the accountants seemed to feel as long as they could follow the transactions they really didn’t care what I took out or put in and in all the years I’ve been doing it, it’s never come up as an issue.