Account for rental property

[Michael Janke]

Good afternoon! 

I am 2 weeks from closing on my first deal- a duplex house hack. The property will be in my name, and it seems the general consencus is that someone just getting started doesnt need an LLC. However, I have also been told I should get a bank account to collect deposits and rent in, and to pay expenses from. Should This be a business account, or just a seperate personal checking? What are advantages/disadvanteges of each? Can you get a business account without an LLC?

I plan for my 2nd deal and beyond to be BRRRRs, and will have an LLC later on. Should I go ahead and get one now, or wait?

Thanks,

Michael

[Nathan Gesner]

It can be a personal or business account. There's no requirement for you to use a business account and the bank may charge additional fees, so why bother?

A checking account and a savings account.

SAVINGS: Security deposits are held here so they are easy to account for and not accidentally spent. I don't put anything else in the savings account.

CHECKING: This is my daily operating account. The rent money comes in. Pay mortgage, taxes, insurance, utilities, maintenance, and other expenses from here. If you have a reserve for emergencies, I would keep it here as well. For example, you may have a $5,000 reserve so you know to keep the balance at $5,000 at all times.

If the Checking account builds up to a higher amount than needed, I transfer the excess funds to my INVESTING account that is specifically for new investments. This ensures I know exactly how much I have available at any given time for a new investment and my wife knows it's my money to invest and not to buy a new couch set or trip to Italy.