Best credit card and bank accounts for rental property & how many

[Alyssa Magyar]

Hi all! I have one town home I am currently living in and hoping to rent beginning in 2023! (hoping to do a mid-term rental, furnished, focusing on professionals/traveling nurses). I know I need to get a credit card and bank account separate from my personal ones. Any suggestions on how many bank accounts I need, and which banks and credit cards are best to use for the rental property? Also, how do you go about paying yourself through the rental property bank account? Do you take a % and do a direct deposit/transfer from the business account to personal? Any advice and info is very appreciated! Thank you!

[Nathan Gesner]

My basic accounting instructions are below. Keep business separated. If you are using any of the money for personal use, you will draw that money out of your investment account and into your personal.

As for Credit Card, check out travelfreely.com to learn how to use credit card points. It's completely free, there's a training program to show you the basics, and they will recommend which cards are offering the best terms. I'm an amateur but I flew to Texas twice, Mexico once, California three times, and I took my family of six to Hawaii and I still have over 400,000 points. I use it for all my business purchases ($25,000+ per month) so my results aren't typical. However, I don't open new cards all the time and get the bonus miles like I should. You can easily get 200,000 miles or more per year through ordinary spending.

You need two accounts: checking and savings. If the properties are split into more than one LLC, then each LLC will need its own accounts.

Checking: collect all income here, then use it to pay bills. Pay the mortgage. Pay for maintenance. If you are setting aside funds for capex, taxes, insurance, or other expenses that don't occur monthly, transfer those funds to Savings each month and hold them there until it's time to spend them. You will receive the security deposit in Checking but then transfer it to Savings.

Savings: Hold the deposit here so it's separate from operating funds. You can also hold money for maintenance, capex, taxes, insurance, or other projected expenses. When a tenant moves out, transfer the deposit back to Checking so it's ready to apply towards expenses or to refund to the Tenant.

If you end up with excess funds in the Checking account, I recommend you transfer it to a third account that is specifically designated for future investments. That ensures you don't spend it on other things and that you know exactly how much you have available to spend on the next purchase. If it's mixed in with your deposits and reserve funds, you may accidentally spend money you shouldn't have.