Property Management Trust Accounts

[Karen Higgins]

I have a question about property management trust accounts.  My husband and I currently own and self manage 105 units in Minnesota.  We are looking to expand our business this year and potentially start a property management company.  I want to make sure I have everything set up correctly before we do that.  My question is regarding trust accounts.  We currently have a trust account that we hold all the security deposits in, and an operating account that rent is paid into and bills are paid out of.   

Based on some research, I'm finding that if you are to manage other people's property we will need another trust account for their rent to be deposited into.  My question is, can this also be an operating account to pay bills for that property from, or is this strictly for rent deposited and then transferred to the owner?   Also, can the property management fees be pulled from this account to pay the property management company each month?  

Another question, can we use the current trust account that holds our security deposits for owners security deposits or is that considered "commingling"?  Or will I need to set up another trust security deposit account specifically for owners?

My goal is to get this set up correctly from the get-go, so any input would be greatly appreciated.

Thanks!

[Kim Meredith Hampton]

Karen,

Thats great!! Congrats on getting to the next step.

I have also used AppFolio since 2009 and have 1100 properties under management, so having the right system in place for third party management is huge!

I have several rental properties myself, I they are all in the same account together with other owners. It is not considered commingling along as every month you are reconciled. In Florida we can keep up to $5000 of our money in the trust account. We must also reconcile and date our reconciliations every thirty days in the event of an audit.

In Appfolio you can also create portfolios, which may be helpful in your case.