Separate Bank Accounts?

Question

Right now I have 2 vacation rentals and one long term rental. Each has a separate bank account. After some research I've decided to consolidate. Should I put all 3 houses in one checking account (mortgages maintenance... everything) Or should I separate the Vacations and the Long Term rental?

Short term goal would be another vacation rental with 10% down Second Home Loan. Or possibly 20% down investment loan if we can't make the underwriting work for 10% but I don't see why that would happen.

Long term rental doesn't see much action other than rent coming in and mortgage payment going out.

Gut tells me it doesn't matter just put them all together to make things simple. I'm sick of all these debit cards.

Thanks!

Luka Milicevic · Answer

I have a separate bank account for each partnership I have.

All of my personal investments have one account.

I like to keep things as consolidated as possible-the fewer bank accounts the better (in my opinion)

Luke Carl · Answer

you rule @Josh Braun!

Jason Hirko · Answer

@Lucas Carl I have one business account for my main investing business. I used to have three and it was just a big pain with no real benefit. Now if you have multiple LLCs like I do, I definitely recommend a different account for each of those.

Michael Lee · Answer

Hello and welcome to BP!  I think your account or CPA person would say to keep separate accounts and, if you have not already done it is eto form some type of corporation or a LLC to keep your business activities separate from your personal stuff.  I you have anything of personal value that is not touchable if a legality thing takes place that could endanger that I  would keep all business things seperated from any personal things and you might have to seek a cheaper account for all.  That unfortunately is just a part of doing your own business. Do all the learning that you need to start.  Like what you choose.  Take action.  Be patient and simple when starting out. Do the average in that neighberhood on your project.  Education goes on forever.  Learn more on what you do and learning how to look at financial statments and understand them.

Good luck to you!

Jeff Kehl · Answer

@Lucas Carl Whether you use an accountant or have this setup as an entity, the answer really depends on how the business is run and the accounting is done. If you run it all as one business, keep track of all of the finances together and report on them all together on your taxes then 1 account would make the most sense.

You don't have to, but should have an accounting system that keeps track of income/expenses and assets/liabilities and it should reconcile to the bank account(s) you have.

If you're not skilled with finance/accounting and want to grow bigger I would suggest you get an accountant that knows real estate. You don't have to use a local one if you don't mind an over the phone/internet relationship there are several on bigger pockets.

Josh Braun · Answer

Hey @Lucas Carl - if you don't have an LLC and these are your personal rentals (not partnered with other folks or entities) then I'd recommend just one business bank account.  I wouldn't separate just because of the short term and long term differences.  Banks will look at your total rental cash flow and this will be easy to show them one account statement.  Side note, if you ever do new construction or rehabs then I would use a separate account for that.  You will want to be able to show passive income (rentals) in one stream and development income (new/rehabs) in another.  Here again, this is my opinion and not accountant advice :)

Blair Russell · Answer

@Lucas Carl There should be some type of small business advisors in Nashville who will have lawyers and accountants who can help. It looks like you have plans to grow so you'll want to have those people in place. If it's all under your name it is fine to have one account for now, although some places have rules for a separate account to hold deposits on long term rentals,  not sure if that applies here...

Luke Carl · Answer

@Eli Molloy I don't have an accountant. Can't find one that will get back to me were too small potatoes.

No LLC.

Eli Molloy · Answer

My best answer is to ask your accountant how they would like to see it set up.

My non-accountant answer is that I would make sure to have separate accounts for each business entity. If long term and sort term are under separate LLCs then have separate accounts. If they are all in the same LLC, or you own them all under your name, then keep it simple and go with one account.

If you go with one account make sure to keep good, separate records. If you decide to sell, refi, etc. you will want to be able to show the numbers for each property.

Separate Bank Accounts?

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