Separate Bank Accounts for Rentals

[Max Labo]

I recently purchased first rental property. In the future I plan to transfer into a business, but for now the property is under personal. I wanted to open a bank account strictly for tracking my rental. Any suggestion on banks/ bank accounts that have helped for tracking rental property cash flow.

Thank you 

[Kurt Lane]

Hi @Max Labo,

Congrats on your purchase! I would recommend having two bank accounts for the property: one for rental income and to pay for any expenses, utilities, and maintenance work; and the second to hold the tenant's security deposit. You want to avoid co-mingling funds so it's best to hold the deposit in an entirely separate account. Depending on what state you live in there may be requirements around whether or not the deposit can be held in an interest-bearing account and if interest income needs to be shared with tenants. In Portland, Oregon, where Chroma Property Management operates, that's an area of regulation, so it's worth looking into requirements in your market.

[Benjamin Aaker]

Your bank isn't the best place to be keeping track of this. You should consider hiring a bookkeeper who uses dedicated software for this. Talk to your accountant to find their preferred software. If you don't want to hire out, you can take the time to learn the software yourself. You can also talk to your bank to find what software options can easily download the transactions from the bank.

[John Teachout]

We have a checking account for our rentals and also utilize an online savings account for security deposits. As mentioned, state laws may regulate treatment of security deposits so it's good to keep those separate either way. We receive rental payments into our checking and pay bills out of it too. All our accounting is done on Quickbooks as you'll need to keep track of all in and out expenses for each property.