Have a bank account per property?

Question

I am going from one property to three this month which I expect to get a little more difficult when it comes to following the money.  So, I was wondering how other are keeping track of their banking finances.  I have read that some investors lump all their real estate income into one account.  I have also read that that is a bad idea because you lose track of where your money is coming from and going to.

So I am asking what method you use for "banking".  I have spreadsheets and I am aware of money tracking programs which is not what my question is.  What I am asking is... Do you have a savings and checking account per SFH?  How do you decide what money goes into which account?

Jeff B. · Answer

The issue is easily solved with a good accounting program - - I'm using Quickbooks Pro 2009.

I create a CLASS to indicate which specific property and then associate all income/expenses to that class.  The reporting by Class makes it perfectly clear how each property stands.  The bank account is a non-issue as that is NOT related to any class.

Jeff Filali · Answer

It depends on what you're doing, rentals, flipping, etc. Maybe you have 2-4 accounts, an Operating Checking Account, an Escrow Account, and maybe a Reserve Account. I guess if you're not good at tracking it, you may want separate further to have a tax account and insurance account also, to hold back for taxes/ins. But I wouldn't see any reason to have individual accounts per property, that's what accounting software is for.

I would bet most people only have 2 accounts (Operating and Escrow).

Zach Savage · Answer

One bank account is perfectly fine for multiple properties as long as you keep track of the income and expenses by property.  That is what really matters, and is achievable via Quickbooks or another accounting software or spreadsheets.  Quickbooks easily lets you set it up where you can show income and expenses by property.  You can either do it by class or by customer/job.  In either case you are able to show an income statement (or any other financial report) by property.

At the end of the day it is all preference but as you scale do you really want to maintain 8 bank accounts for 8 properties?

Bob B. · Answer

A separate account for each property and the tenant has deposit slips.  Most of the tenants bill pay.

All rent and expenses come out of their respective account.

Tax time I have everything I need and the accountant is happy.

I'm too old and not interested in learning Quickbooks.

Andrew Johnson · Answer

@Kevin Kite I don't have separate accounts, however, I do have a property manager so there are statements that are provided to me monthly and I can go into a SaaS portal at any time and look up all of the income and expenses on the property.  So all I'm really doing is reconciling distributions against the statements.  I'll leave someone else to chime in if they're self managing to see how their approach may be different.

Kevin Kite · Answer

Thanks for the feedback everyone.  I was surprised to not hear more from investors who use separate bank accounts.  It sounds like the easiest method is to let the software do the work.

Have a bank account per property?

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