Banking Best Practices for Rental Properties

[Mike Healey]

Just purchased my first investment property in St Louis, MO - A duplex that we'll be owner-occupying. We have about a month before closing and right now, I'm trying to figure out the best way to handle my banking situation. Should I create a totally separate checking/savings account strictly to deal with the income and expenses from the rental? Should I also pay the mortgage from that new account? Or since we will be living in the property as well, should I pay that from my "normal" bank account? Are there tax considerations to this, especially if down the road we accumulate more properties? Does any of this matter at all? Are there any articles to read or books to buy? Just looking for any best practices and tips on how to keep finances organized and manageable. Thanks!

[Nicholas Aiola]

@Mike Healey You should definitely open a separate bank account for the rental activity. Not only will this make accounting for income and expenses easier but it will help on the legal side of it, too - if you use the same account for personal and rental expenses, a case could be made that you and the business are not separate entities.