Question on handling money from management company

3 Replies

Quick question. My bookkeeper ( not really understanding the rental business ) does not want me to put my income from my rental into my IT company. While I understand that it would be best to use its own bank account do I need to create a 2nd business or just use a 2nd income stream? This is NOT for the deposits just what I am sent after the mortgage is paid by the management company.  Thanks, James 

You have a Property that is producing income. You want to transfer all the remaining cash after expenses into your IT company. No, you cannot do that.

However, you can transfer the money to yourself (personal account) and then transfer it to the IT company.

You created a second business when you invested in rental properties. Whether you create another entity (such as an LLC) to contain that business is up to you.

You can take your profits from your rental business and use them to invest in your IT business. Just keep a good paper trail for those transfers.

I don't see any benefit to having your IT business own your rental property. That just adds to the liability risk of both activities, and I don't see any reward for taking that risk. Am I missing something?

Thank you. That makes more sense now. 

Since the IT company is solvent I don't need to put the extra cash in. Instead, it sounds like it would be best to open a separate account and keep the money to be used for any future expenses. 

It's appreciated,

James 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.