Banking with Property Manager

9 Replies

I am closing soon on my first rental property, I will be using a property manger to manage my property. Property Manager have two option on how to have operating account.

1. To have a trust account with property manager as operating account, property manager will deposit check in my bank accoint once a month minus bills and his percentage.

2.  I add property manager as authorized user to my bank account and property manager will operate though my account. 

Can you please suggest which one you suggest a preferable way?

Best, Gary

My banking relationship with my property manager is set up like #1.  Seems to be working well.

As a PM I do number 1 with all of my clients/customers/partners.  

Too many downsides for both parties using #2.

Hi @Chad Hale , can you share some downsides for #2? My PM is recommending #2 as option.

Best, Gary

@Gary Bahl I own multiple properties and I have never seen a PM offer # 2 as an option. It's risky for investors and time consuming for PM. Think @ if the PM starts managing over 200 properties, s/he would have to operate 200 separate accounts if each property is owned by different investor.

I wouldn't even go with that PM if he/she is recommending option # 2.

@Gary Bahl   A few issues with #2.  From the owners perspective, giving access to someone else to my checking account.  I wouldn't do it.  From the PM perspective, I want to control the account as I know what is coming in and out and when.  I don't want to be coordinating with someone else wondering what outstanding payments might exist.  Also this doesn't work well with account automation and monthly reconciliation.

@Alpesh Parmar We do open a separate account for every owner.  This removes any issues with co-mingling of monies and keeps CA PMs out of hot water with Department of Real Estate.

Here's some additional info if interested.  Or google real estate trust funds property management.



@Gary Bahl only go with option 1. Like @Chad Hale said there are two many risks on both owner and PM for otpion 2. The best PMs will never even offer option 2. 

@Gary Bahl I would ask this PM how many properties they manage because only a crazy person would do what you suggested in option2.  Yeah great if you are a PM with only 5 owners then maybe you could keep it straight but with hundreds of owners no way!

If they only have 5 owners get ready to learn some lessons since you are going to be a guinea pig while they learn the ropes.

If they aren't NARPM credentialed then you should be quickly moving on to someone who is. NARPM members vs. an agent with a license who thinks they can manage property is like Major league baseball vs. the little league.  

Thanks all for the responses. 

One additional detail I missed mentioning that in #2 option, I will open additional separate personal account for my mortgage payments etc. I will withdraw set amount from my joint account with PM. So i will have two accounts in this case. One, joint with PM and Second, my personal account. 

With this information do any of yours recommendations change? 

@Gary Bahl    Nope doesn't change a thing for me.

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