Banking for Investment Property

[Jordan Theisen]

Hi all,

Recently I closed on my first investment property in the twin cities area of Minnesota where I'm also using it to house hack. I'm wondering how to go about setting up a new bank account for the property to keep my business and personal expenses separate. I've done some research but haven't found anything that fits my situation. 

I don't have an LLC and have the property under my personal name. Should I open a new personal checking account since it's just under my personal name or start a small business checking account? I just don't think its worth using a business checking account yet just for this one property that I'm also living in. Would using a personal checking account be okay? Curious to what you all think and would love some advice.

Thank you!

[Christopher Giannino]

I went to my local branch and opened a personal checking account which is strictly for my rental and where I will run everything out of.  The checking account I opened required a $1,500 minimum daily balance in order to not get hit with a monthly service fee.  To me, this was fine because I started the account with a reserve of 2 months and then plan to build up my reserve fund even more before I officially start "taking a profit."  

For the tenants security deposit, I opened up a savings account using a W9.  This is because the security deposit does not belong to me, the landlord, and therefore could cause bigger problems later on if I was to commingle the funds.  

Right now in my investing career, it makes more sense to just open up personal accounts vs. business accounts since I don't hold the property in an LLC and I only have this rental at the moment. As I start accumulating more properties my logic might change but for now it works.