Hi all we are close to closing for our first investment property in New Mexico which happens to be an 8 plex. I have a separate business account set up for receiving rents and deposits. This account would also be where the mortgage payment and any other related costs come from.
Now, I was just told yesterday by a broker that I would need a trust account for this amount of units. Is this true for New Mexico or can I use my business account I’ve set up?
If it is true, how do I go about setting up a trust account and what other information do I need to know for tax purposes etc?
Hi @Lucas Gabaldon and welcome to BiggerPockets!
Congratulations on the 8-plex deal and for stepping boldly into the investment game!
That said, I've gotta ask -- and I'm really not trying to be a jerk here -- if you don't know the answer to the question you posed, why not consider getting the property professionally managed?
Eight units is just enough moving parts that you really don't want to be winging it in the face of Fair Housing laws, local ordinances, and a host of other things you don't even know to ask about. The price of getting this wrong is horrendously high!
For the record, I wish I had listened when others told me this exact same thing 20 years ago. Just sayin'.
Great question. No you do not need a trust account to hold deposits. I recommend holding them in a second account but it doesn’t need to be a trust. Any account will do.
Thank you for the response! I’m actually a licensed broker here in town, I just had not dealt with separate accounts as this was not part of my scope of work simply selling homes.
And yes I agree about being careful. I actually contacted our states Real Estate Committee Attorney and posed the question to which I received my answer.
Thank you for this! Yes I got the same response from our Attorney in ABQ.
Thank you again!