First Home Buy/Rental Banking and Accounting?

Question

Hello BP Community.

I'm going buy my first home in the next few months. I am currently renting, but looking to buy a multifamily and househack to get started in REI.

Currently I have 1 checking and 1 savings account through my main bank, and 1 savings account in a high interest savings online bank (where I keep the money I plan on paying for my home purchase costs).

Any insight is greatly appreciated. Thank you!

I am wondering what the best method is for banking/accounting for a rental property. Scanning through other forums it looks like many people open 1 checking and 2 savings accounts (1 for security deposit and 1 for cap ex/repair). Any opinions on this? Also I was wondering if many of you prefer to setup the savings accounts in a higher interest online bank (like Goldman Sachs Marcus). What is the best way to setup your banking to scale in the future?

I wanted to ask the BP Community first before consulting a local CPA.

Any insight is greatly appreciated. Thank you!

Steve Vaughan · Answer

That anything is called high interest or high yielding in this rate environment always cracks me up. I have a mmkt acct that pays 1.2% (now) to about 2% (normally) for my opportunity fund. At least they don't lie to me and call it high interest LOL. I can also invest if I want to. Don't work too hard to squeeze out an extra .02%.

As for accounting and banking in the beginning, I'd keep it separate but simple. A savings or trust account for security deposits and a checking acct to run income and expenses through. Most likely at the same bank you use. Ask about a dba maybe. Having a checking and savings acct at a different bank with different check colors and stuff is also not a bad idea. Kinda makes it official.

Personally, I knew I wanted to do REI full time back in the day so I set up a little mgt co to run everything through, but to start and try it out a separate checking and savings should work great.

Community banks and CUs generally have the lowest fees, but Chase has great benefits for Veterans. Free checks, free cashier's checks, totally free, etc.

Antonio Cucciniello · Answer

@Karl Sperl. Hey! I currently use Ally bank to get a slightly higher rate for savings (1.5%) and they limit me at 5 accounts so I have it split up for income, capex + repairs, mortgage +taxes +insurance, utilities, vacancy

Matt Leber · Answer

@Karl Sperl first would like to say GO GATORS! Noticed your profile pic and couldn’t resist. We thought about doing separate accounts for capex and deposits as you mentioned above, but ended up opting for just one ‘rental’ account that everything for all our real estate goes in and out of. This keeps it simple without opening too many accounts. And we have a business credit card that we use for all the real estate expenses to keep track of those transactions. Payment for the CC comes out of our ‘rental’ bank account. I’m sure others will have good advice, but this system has worked well for us.

First Home Buy/Rental Banking and Accounting?

First Home Buy/Rental Banking and Accounting?

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