Best bank for landlord?

Question

I'm hopefully acquiring my first property very soon. Although the property will initially be in my name, I will be forming an LLC to manage the property, and opening a separate bank account for it. I will eventually transfer the property to the LLC as well.

My state requires that tenant security deposits are kept in separate accounts and not commingled. I know CitiBank offers Landlord banking services for precisely this. Does anyone use them for this? Any other suggestions for banks? I'm looking for a banking solution with no fees, if possible.

Thanks.

Donald G Longenecker · Answer

Refreshing this thread, I own a property that I have just rented out in PA.  I am looking for advice on which type bank to use for both escrow and checking account.  Local?  Credit Union? National? Any assistance is greatly appreciated!

Tony L. · Answer

Whatever you do, DON'T use USAA...  They randomly audit accounts for business activity and will send you a letter stating that they are going to close your account for conducting business from a personal account because the account "is not set up for business use"--whatever that means.  To attempt to remedy the situation I asked if they had a business account and they said no.  So it looks like I will be moving all my money away from them.

This is also the same bank that employs folks that asked what Popmoney and Zelle were...  One of the phone reps also recommended that I stop investing in real estate and buy some bonds.  Sounds like good advice to me!  ;-)  LMAO

Chloe Mayer · Answer

@Donald G Longenecker Im also thinking about this! Looks like most conversations around this are quite old. I think Im going to look into reusing a national bank I have (Ally), or possibly looking for a local (in Tennessee) credit union.

Steve Babiak · Answer

I have been putting my landlord/tenant accounts in TD Bank recently.  They can set it up as a personal account if you own the house in your own name; they can set it ups as a business account if it is owned by a company.  Regardless of the bank you use, you want to get the IRS W9 form completed by the tenant in advance; this gives you the SSN and it shows that the named party is exempt from backup withholding - and the banks won't open an account without that.  And if these accounts are properly established, the credit for any minuscule bank interest the account receives is directed to the tenant, and becomes the tenant's income (not yours as the landlord).

Steve Babiak · Answer

Steven Hamilton II, MD and PA have some requirements on interest and I'm sure other states have as well.  PA doesn't specify any rate, they just require interest after being held two years.  MD had something like 3% IIRC ...

But the W9 is still a must, and I don't see too many other posters even mention that.

Rich Weese · Answer

Here is another plug for Wells Fargo. I mentioned in a thread in 2012, although on a larger scale I was very happy with the refinance that Wells Fargo did for me in the Dallas Texas area. This was after failing with several other folks that I had found on bigger pockets...... rich

Suzette T. · Answer

Good to know! Very interesting - you would think they would be reliable! And why no business accounts? So odd.

Johann Jells · Answer

This doesn't help either of you, but I bank with a NY & NJ midsized Investors Bank, and I've been amazed with their high level of competence compared to previous experience with PNC & Cap1. Discovered them looking for mortgage when thing were messy in 2012, they were so great to work with that I then moved our accounts there. Cap1 was so pathetic, it would take 2 hrs every time to open a security account and they'd invariable do it wrong!  When I closed everything they couldn't even get that right, I still get a notice of an escrow account with $0.00 balance!

Steve Babiak · Answer

I added an update to one of my earlier posts on this thread, because I no longer use or recommend that bank for any new landlord tenant accounts.

Steven Hamilton II · Answer

Steve Babiak,

Well said, although it can depend upon the state involved as to if it even can be interest bearing.

-Steven

Best bank for landlord?

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