BRRRR Strategy TIPS Episode #3

BRRRR Strategy TIPS

Episode 3

Today we’re going to focus on one of several components to the R2 (RENT) phase in the BRRRR Strategy.

RENT:

Business Checking Account & Regular Checking Account

Completing the little things often have a huge impact on the backend of anything that you do. That infielder that wins gold gloves at third base every year has been fielding 100’s of ground balls every day for an extremely long time. He makes fielding a 100 MPH laser look simple because he has prepared for it day in and day out. This needs to be your mentality even if it’s “just a bank account.”

Business Checking Accounts

Separating business income from personal income

If you’re looking to open an LLC, S Corp or any other type of entity having a business account is a MUST. Separating your business income from your personal income will help you, the bookkeeper, accountant, and/or your CPA. The tax professional and/or you will be able to decipher the information faster which will make the job much easier month after month and year after.

Deposits and Withdrawals

If you’re doing business under an LLC, S Corp, or any other type of entity you’re going to need to run expenses and payments out of the company's business account. Make sure that your direct deposit is going into the bank account that belongs to the entity you have established. On the flip side, make sure that all expenses related to the home are paid through the same business account. This way all your deposits and withdrawals move through the same business account.

Personal Checking Account

If you’re looking to buy an investment property under your personal name, opening a regular checking account will be acceptable. However, I would open an account that is only for your rental business. You can have one account for all properties or individual accounts for each property. Although having different accounts for different homes is a lot, it does make the accounting aspect easier for the bookkeeper or whoever is taking care of the account details on a month-by-month basis.

Documents Needed to Get Approved

When you’re opening a business account, you’re going to need to show the following at minimum. Articles of Incorporation and/or Operation Agreement, E.I.N. (Employment, Identification, Number) if applicable and a members information page which includes your address, full legal name, and percentage of ownership. Lastly, you’ll need driver’s licenses for all members. Make sure that you have this whether it’s an in-person meeting or online application. The bank will obviously do its due diligence on all members which include a background check and running your SSN through check systems at minimum.

Choosing A Bank

Choosing a bank doesn’t have to be a big ordeal. If you can use the bank that is lending you the money that would be ideal. This is great especially in smaller markets because banks lend money on deposits. If your property is in a smaller town, it will help this bank to keep the rental deposits in the same city. If you’re using a Mortgage Broker, this method won’t help you.