Separating Money for Properties

[Benjamin Pifher]

So with my business, I have 2 separate bank accounts per property.  I put deposits in one for each property and try to ignore that money altogether as my ultimate goal is to be able to give that back to the tenant.  I use another account to place rent into and take expenses (mortgage, etc.) out of.  
As it grows it will be quite a few accounts to pay attention to, but so far it's working.  What do you do? How should I change my model going forward with more properties/units?

[John Teachout]

This is a state specific post since some states require deposits to be held in a separate account (eg. Florida) In Georgia where we are, if you have 10 or more properties, there's also requirements that they be sequestered but not on a per property basis. So I have an account just for security deposits. I also have an account for Capex, set asides (taxes, insurance, etc). Books need to be kept on every property but you probably don't need to have separate bank accounts for each as that gets ridiculous if your portfolio grows. We have 1 business checking account that we pay bills out of no matter which of our 15 properties it's for. All in and out gets tracked in Quickbooks so a report can be printed at the end of the year for each property. Do whatever works for you, there's not necessarily a "right" or "wrong" way. Just remember at the end of the year, all income and expense needs to be ascribed to a specific property as that's what you'll put on your schedule E.