Navigating Payday: How to Best Disburse Profits for Buy & Hold Rentals [Video!]

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So you’ve worked hard to keep that buy and hold rental property going, and now it’s time to reap some of your rewards and take a profit draw! Whether you are working with a group of investors on a large project or on a rental property you own all to yourself, you need to have a strategy for disbursing profits. There are some key things to keep in mind, which I outline in this video. You should consider these questions:

  1. How often should I distribute profits?
  2. Should I pay out all the money I made?
  3. How do I know if the property is performing to my expectations?

Related: Accounting Practices for LLCs: What Every Real Estate Investor Should Know

Watch my video and find out!

Have more questions on paying out profit draws?

Ask them below! Have a great and profitable week!

About Author

Matt Faircloth

Matt Faircloth, Co-founder & President of the DeRosa Group, is a seasoned real estate investor. The DeRosa Group, based in historic Trenton, New Jersey, is a developer and owner of commercial and residential property with a mission to “transform lives through real estate." Matt, along with his wife Liz, started investing in real estate in 2004 with the purchase of a duplex outside of Philadelphia with a $30,000 private loan. They founded DeRosa Group in 2005 and have since grown the company to owning and managing over 370 units of residential and commercial assets throughout the east coast. DeRosa has completed over $30 million in real estate transactions involving private capital including fix and flips, single family home rentals, mixed use buildings, apartment buildings, office buildings, and tax lien investments. Matt Faircloth is the author of Raising Private Capital, has been featured on the BiggerPockets Podcast, and regularly contributes to BiggerPockets’s Facebook Live sessions and educational webinars.


    • Matt Faircloth

      Hi Dawn,
      We typically buy our properties in an LLC or LP up front. Some investors think they can’t do this as they don’t have the credit, track record, equity, etc… but I have found that there are ways around this and banks that are willing to work with them. I would much rather buy in an entity for the many benefits that come along with it.
      All that being said, we had a few 4 units that we owned personally and did a quit claim deed to move them over to an LLC. The bank didn’t blink as we kept making our payments on time.
      Additionally, although we owned the properties personally we still setup a separate LLC and had our tenants make their rent payments out to that company. We paid all the bills out of that LLC including the mortgage payments. The bank didn’t care who was sending the checks as long as they were made out for the right amount and showed up on time.
      Bottom line, the banks don’t want the property back so the probability of the due on sale clause getting called up is slim to none if the property is current on it’s payments.
      Thanks for the insight!

      • This is great information and thank you for sharing. I have one investment property in TX but I live in CA. If I wanted to setup an LLC, do I need to start a new one for every state I purchase an investment property in or could I used the same LLC for properties in TX and CA?

        • Matt Faircloth

          Hey Stefanie,
          Of course I need to do the typical disclaimer – I am not an attorney or a CPA so any advice I give is not legal or accounting advise, LOL!

          That being said… We have done business in multiple states with our LLC’s and have just been required to file as a Foreign Entity in that state. We were able to do that through the State’s website. So my bet is that you can do it but you should ask a professional about it also.

          Take care,


  1. Dawn A.

    I personally distribute every month. For property taxes, I divide the annual property taxes by 12 and set aside 1/12 of the property taxes every month. Also for water bills, usually the tenants pay that. If it’s a shared water, then I estimate the water bill expense and put aside that money into my reserves BEFORE I pay out. Insurance is paid on monthly installments so that’s pretty straight-forward.

    I understand that NJ is different than WI, so sometimes regional differences account for the difference in advice. Also maybe some people are okay with quarterly distributions, but I prefer getting money every month.

    I also don’t start taking distributions until I’ve built up my reserves enough. After renovating the property and placing a tenant, I put any distribution I might have taken back into reserves until that reserve is at least $1,500 – $2,000. Then I start taking distributions and continue to let the reserves grow.

    • Matt Faircloth

      Hey Dawn,
      More good points, thanks! It sounds like you are taking your projected annual expenses and dividing them by 12 and applying them on a monthly basis to your income. Correct? Question, how do you account for seasonal expenses like snow shoveling and landscaping on multi families?

      Good idea on building up a reserve before taking distributions. We hold our reserves in a separate savings account and make a quarterly contribution to that account to continue to pad it for thinks like roof repair, heater replacement, or major renovations.

      Thanks again for the good convo!


  2. Richard G.

    Hi Matt,

    Can’t believe I missed this one — I think it was finals week and I was busy studying for my exams! lol — but anyway good points and appreciate you sharing. I have separate accounts for each of my rentals but did not think about having an additional savings account for them. I know the biggest thing for me was trying to find a bank that was investor friendly not charging monthly fees AND that I could “link” with my main account in case I need to distribute to myself!!! Also establishing relationships with the banking officials was another key aspect on my mind when opening these accounts as I never know I might be requesting a loan 6-12-24-36 months from now! Thanks — rg

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