Separate Bank Account for Rental Activities?

[S Yu]

Hi all

I'm closing on my first property today a 3-family unit. I was wondering if I should set up another personal bank account for all activities. I'm going to be depositing my checks and if there are repairs I'm going to take it out of this account.

I will also be paying the mortgage from this account and if I am short, I'm going to transfer money from another account.

Is this a good idea and what does everyone do? I'm just starting out. Thanks

[J Scott]

Are you planning to create a business entity out of which you with either hold and/or manage this property?

If so, set up a separate business account. If you ever get sued and want to use the business as a legal shield, having a separate business account that doesn't co-mingle with your personal funds will be important when it comes to the determination of whether what you have is a business or a personal hobby (though there are certainly lots of other aspects of this you need to investigate as well).

If you don't plan to create a business entity, then the only purpose I can think of for a separate account would be to help you manage and track your income and expenses. If you don't need a separate account for that purpose, it just boils down to personal preference.