[Advice] Banking.. LLCs? Separate Accounts?

Question

Hello, it looks like I'll be finally submitting an offer this week and the agent is representing both sides and seems to think we are in good shape to make this deal happen.

It's my first investment property. I've been reading about separating your rentals from your personal assets. How does BP view creating an LLC per property? If not an LLC what about separate banking for your units? Seems to be an organized and really easy way to track incoming versus expenses.

Is a business account something I should be thinking about or just any sort of checking account (for rent payments) and a savings account (anything extra after mortgage payment)

Any particular banks that are recommended?

David M. · Answer

@Michael Lanci

Search around BP or just keep looking at the new posts.  This is being asked daily.

You can have 1 property to a LLC, many properties to a LLC, or no llc at all.  Esppecially when just starting, you don't really need it.  Many investors on BP have posted that they own 20,30, even 50+ properties personally..  Just hav ethem insured, carry an umbrella insurance policy, and keep them in good repair.  Legal entities such as LLC's are not eligible for conforming residential loans so you'll have to get commercial financing.  You need to keep everything under the LLC to both get the limited liability and protect the corporate veil.

A LLC will need its own bank account.

As for getting more bank accounts, it depends on your bookkeeping/accounting.  As you get more properties, that will be a lot of bank accounts, check books, and potentially credit cards to balance and track.  Also, you'll have money spread all over the place.  Setup your bookkeeping well and you can run everything potentially out of one bank account if you want (just follow NJ law about security deposits etc.).

Hope this helps. Good luck.