Payment logistics and the "Time Gap"

[Melanie Noblin]

So you've got your toes dipped in your first rental investment property. You've taken the advice of making sure you have some cash reserves to pad yourself.

1. Renter pays by the 1st. Your mortgage payment is DUE on the 1st. This is the gap, so do you always just keep paid one or more months ahead to keep forward of that gap?

2. Do you pay your mortgage electronically from the account your renter deposits into? Or does your property management team handle that?

3. If no e-pay is available for the loans you took... What if you have 4 properties and 4 separate loans, do you send out 4 mortgage checks from all different accounts?

... and am I just overthinking everything?

[Nate Garrett]

Hi Melanie Noblin

1.) I just pay the mortgage when it is due. If you are investing in rental property, you should have sufficient capital reserves for each property, which can be drawn from to pay the mortgage. You can set up a rental operating account that all income and expenses flow through.

2.) My property management company does not pay the mortgage. The owner does that. We direct deposit the owner's funds into their desired account. The owner pays the mortgage.

3.) I think it is wise to make sure the operating account that is used for income and expenses is opened by the entity that owns the property. So if you use 4 different LLCs for 4 different properties, I would have 4 different accounts. If you own the properties in your personal name, you might consider opening a separate account than your personal account for rental property purposes.