Would you lump all your investment property finances into one bank account or do you prefer to spread them out among several banks? What strategy would you choose? What strategy have you taken?
I just recently finished moving all of my checking / savings accounts over to my discount brokerage company. I split mine up between my personally segregated checking account, another personal checking account for properties titles in my name, and an LLC account.
The brokerage company offers a 'cash management account' (basically a free checking account). While I'm new at that type of account with them, it offers some great features...
-Free Checks, both for accounts in my name as well as my LLC!
-Free wire transfers
-Remote check deposit (personal only, LLC checks I can remote deposit to my credit union and then EFT over)
-Automatically Reimbursed ATM charges
-Free Bill Pay
-Ease of making other investments. I can move into a stock / mutual fund investment for a season while researching deals. I have the accounts setup as margin accounts as well. Not because I want to borrow against the accounts, but because that arrangement allows me to sell something and wire that money same day with no delays for settlement. So I can both invest but pull the trigger fast on a real estate deal.
-A 'performance tracking' tool. Although this tool is clearly primarily designed to track stock performance in your account, in order to do so it also closely tracks your cash flow into and out of the account. So without effort I can quickly gauge cash flow on each account to help me identify trends, etc.
Personally I was happy to give the heave-ho to my particular credit union. I had quite a bit of money there for a long time and they were always hassling me for fees, but waiving those fees for penniless oldsters over 50. The were worthless for lending as well - insisting I was 'thin file' in my credit report.... which makes me wonder just who they were lending too?!
I have multiple accounts. Each company has its general checking account, then I have an account for security deposits, and I have an emergency repair/property tax account.
@Dawn Anastasi Do you keep the accounts all with the same bank? If so, do you have any tips for dealing with them from a business perspective? I feel like the typical person working in a local branch might be a bit confused by someone holding 5 different accounts. I have no experience with it though, so maybe it is something that they do every day.
I doubt many have the issue of FDIC coverage for an account, so I'll skip that.
There is one golden rule, keep business and personal funds apart.
If you are a landlord or hold money in trust for others you may be required by law to have an escrow account, it's a good idea to have an escrow even if your are not required to do so. That must be one account with only those funds held on deposit. If you are required by law to have an escrow make sure you know the law as to the balance you may have, some are strict as to only having funds in trust and no other money. Otherwise you might keep a small amount for administration of the account.
You can have multiple accounts at a bank, not much thought is given to that it's common in other business activities.
Having accounts in other banks is the first step to building a customer relationship, you never know if you need to ask for money someday and they are more willing when there are past customer relationships in your name. So, using three banks might be a good idea, if you can spread some around.
I had more accounts than I recall. You want an account for each partnership, each LLC, and escrows required. I know some landlords have an account for each property, might be okay if you are weak in accounting and bookkeeping, but one operating account can take care of any number of properties. Setting up an account for taxes, insurance and mortgage payments might help some having auto bill pay on that account. But I suggest trying to keep the number of accounts to a minimum, due to fees, bookkeeping, reconciling check books and keeping it simple for taxes and deposit mistakes. The loan officer at the bank can see at a glance what your average balance is and with fewer accounts he/she won'y have to guess or figure it out, it looks like you are a better money manager. :)