Checking and Savings Accounts

[Steven Eastman]

I am looking for any advice and ideas for checking and savings accounts for rental properties for purchase and management stages. My questions include:

-Do you have a separate savings account for acquisitions? 

-Do you have separate accounts for each property?

-Do you separate your reserves, CAPEX, maintenance, vacancy from your cash flow?

BONUS QUESTION: for those of you willing to answer THE question... Do you maintain a single, multiple or no LLC's for your properties? Why?

Cheers from Denver! 

[Jason H.]

@Steven Eastman  I think your question is dependent on the space you're in (commercial versus residential 1-4 units) but overall I agree with @Enrique Huerta as I also keep separate accounts for all properties.  This will be much cleaner accounting for the short and long term ownership of a property.  Keep all your cashflow in each account and if these are newly acquired properties, keep all the accumulated cashflow in there as reserves for capex and vacancy (assuming you have debt service on them)

As for the LLC question (which has been an age old point of contention among small time investors- risk vs. cost), unless you purchased them all cash or have a commercial portfolio loan on them, I don't see how you can have an LLC entity holding them if you have conventional agency debt on them. Typically residential loans will not let you purchase with an LLC, unless you're talking about doing a quit claim/transfer into an LLC after the purchase (which then you need to consider the transfer taxes which can be really high...2+% sometimes). And if you are talking about residential properties under 5 units...remember how much the accountant will charge you for an LLC tax filing when it comes time each year for each property - that's all coming from your cash flow. Some investors swear by it, some investors, mainly mom and pop, will never have any problems over many decades of ownership. But again it's all about your own comfort level and insurance policies you currently have in place.