Vacancy, PM, CapEX-What to do with it?

Question

Hi All,

My husband and I recently purchased our first property, a duplex.  We are in the middle of renovating it.  My question is: Once we get through the BRRRR process and we begin putting money towards vacancy, repairs, capex-what do you do with that money? Do you keep it in your business checking account? Do you transfer to a separate account? Where does it go? I am a person who likes things to be in order or have a specific place they belong so the thought of combining this money with money from other future properties we buy doesn't really fly with me:)  Suggestions welcome!

Andrew Postell · Answer

@Ashley Glinka most strategies would tell you to have a business account for each company you hold.  So if you don't have a business yet, create one and keep all the business transactions through that account.  If you do have one, then your operational funds are held in that business account.  You can certainly have 2 business accounts for the same company if you see fit.  Hope that answers your question.

Matt N. · Answer

@Ashley Glinka

To be more specific as to why its easier to keep it all in an operating account and not separate.... If you have a $7,000 sewer line replacement in month 6 of ownership (Happened to me!) ... you'll never have set that much aside for repairs by month 6. So you'll end up exhausting the repair account, and dipping into your operating or personal account, thus making the accounting very confusing come tax time.

For any and all tips landlording/investing please reach out. Check out my bio, I am happy to help!

Matt N. · Answer

@Ashley Glinka

I've always accounted for these items up front. Then all gross income goes into an operating account. All bills and expenses get paid out of that same account. Using your monthly statements you can compare and make sure you are hitting your cashflow number. You will likely make more than you expected if you estimated your expenses conservatively up front. Then sit back and watch the account grow!

Ashley Glinka · Answer

Thanks.  We do have a business checking and saving account set up.  I might set up another account just to hold the money that is essentially being set aside for these items.  Or maybe take out the cash flow and start adding that to another account to be used for another project.  I feel like it should be in separate accounts.  Maybe that's just me.  I will be using QB too so I can always keep track of it that way I guess.  Nonetheless-thank you for taking the time to respond.

Vacancy, PM, CapEX-What to do with it?

Most Popular Reply