Rental bank accounts?

[Kayla Bassett]

Hey folks,

I am full speed ahead to close on my first duplex in mid-January. Will be utilizing this as a house hack. 

I need to get my banking situated for property expenses and am looking for suggestions on the best way to do this - here are some options I am considering:

1. open separate checking accounts for security deposits, ongoing balances, and a credit card for property in my personal bank account - automatic payments (rent, utilities, mortgage payment) to/from checking accounts. CC to be used exclusively for property.

2. open separate checking accounts for deposits and ongoing balances in personal bank account. auto payments (rent, utilities, mortgage payment) and deposits to/from checking account. open rewards credit card (ie. southwest) to be used exclusively for this property. ( will have about 6k in upfront furnishing and upgrades costs). 

3. one of the above options but CC pays all bills (rent, utilities, mortgage payment .. not to ever carry a balance) and checking account receives all deposits.

4. one of the above held within a bank account separate from my personal funds. 

Hopefully my question makes sense. I know personal finance is personal, but definitely looking for some insight as to what has worked best, and what doesn't work so well.

Thank you for your input!

[Jacob St. Martin]

Hello Kayla, I highly highly recommend that you keep the bank accounts for the property fully separate from your personal finances. First, in many states you are legally required to hold the security deposit in a separate savings account that nothing else comes out of or goes into. Even if you are not required to, this is a good idea. Then you should have a checking account where you will collect rent and store your cash reserves for the property. Your bills and repairs could be billed to this account but if you want rewards via a credit card you can structure it one of two ways. Probably the better way is to have a credit card associated with just this property but you could also expense those things to your personal credit card then pay yourself back out of the checking account, making sure that you keep detailed records of those expenses. The later is what I do just because it is a little more convenient.