How many banks accounts for rental properties

Question

Hello,

Should you have one saving and checking account for each rental property you own? What if you have 70 units does that mean you create 70 banks accounts is there a easy way to keep track of the money and still not mess up the money with each rental property?

Thanks,

Greg Alway · Answer

@Horacio Gutierrez

You should have 2 accounts.  The security deposit is still considered the tenants money and should be held in a non interest bearing account.  That way you avoid having to deal with financial accounting headaches.  Then you have your other account that you typically use for buying properties, maintenance and what not.

Ned Carey · Answer

@Horacio Gutierrez this question has come up a few times lately. It makes me think people are hearing about this somewhere else and asking here.  Two accounts per property wold get way out of hand quickly.

You NEED at least two; one for security deposits, and one for general use.  If you have multiple companies then open more accounts for each of those companies.

There is a very good book on using multiple accounts to help with budgeting. "Profit First" by mike Michalowicz (give take a letter)  He suggests many accounts but not by property but by what the funds are going to be used for. Even id you don't implement his system, it is great to go through the thought process.

PJ M. · Answer

I've got a separate account for each properties security deposits.  I have 3 other accounts for my properties.  1 account accepts the ACH payments from the tenants.  That then transfers to the operating checking account, at another bank, which I use for the business expenses.  The 3rd account, a savings, gets excess funds moved to just to take advantage of a higher interest rate than the checking account.  However, I only move money there occasionally.

Tracy ODowd · Answer

@Horacio Gutierrez we have a checking acct for each property. Approx 7 of them

Jennifer Rysdam · Answer

Here is a link to a similar thread with lots of good info: https://www.biggerpockets.com/forums/51/topics/180101-bank-accounts-checking-accountsI have a checking, a savings, and a savings for security deposits for my 8-plex. I will do the same for all future investments. I like to keep things separate for tracking. I know you can use QuickBooks classes to separate things as well, but I prefer this way for now.

Scott P. · Answer

I suppose it depends on how many properties you have and what legal/tax structure they fall under.

I can tell you that for many years I ran my sole proprietorship properties in the same bank account as my normal personal funds.  I felt like I had too many accounts to balance and watch over and keep minimum balances in.  So I mingled those those 2 to have one less account to keep track of.  Later I set them up separately.  I like it much better when all my sole proprietorship rentals property was grouped together in one checking account which was also separate from my other accounts.  Basically, everything under my name on Schedule E was lumped into one checking account for rentals.  That worked best for me.

Looking back I wish I had strictly kept 1 account for all personal sole proprietorship rentals, 1 for Sub-S dollars, another for my own personal money, etc.  I wish I had kept the sole proprietor money separate from non-rental $ so that I could look back now  more easily determine how profitable I was (or not) each year.

However, I would NOT have had a separate bank account for each rental I owned as a sole proprietor though.  I don't have 70 rentals but if I did, I would not have 70 accounts unless they were each owned by a different LLC or different SubS, etc.

I would never comingle LLC $ with personal $ but Sole Proprietor $ mixed in with my regular money made my life easier in the short term when i was just starting out.  Looking back I wish it was separated always.

Seth Lipper · Answer

@Horacio Gutierrez

You only need 1 bank account. Just make sure you have enough money in the account for unforeseen expenses, vacancies, etc. What you need is a good excel document or property management tool for the accounting of every dollar spent/earned for each property.

How many banks accounts for rental properties

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