I have a duplex rental and a single family rental. I need to learn how to keep the money separate and set up the bank accounts for that.
Hey John, have you ever considered a checking account for each door? I know security deposits belong in a trust or similar, but you could route rent that way. Or, you could have one checking for all revenue, one for Capital Expenses, one for Taxes, one for Operating Expenses, and one for Owner Pay with a % tied to each account that you sweep after the first of each month. I do this with a few businesses so I hope it can carry over for you in RE!
Checking/savings account for each property. You can do in your name, or in the name of the llc if property is under llc.
Deposit rent checks, move reserves(repairs/maintenance) to savings. Use quickbooks to do the bookkeeping, or hire a bookkeeper.
All transactions for property go into or out of these accounts. Making tax time much easier.
Yes Matthew that sounds like a workable solution. Thanks
Adding the accounts for repairs and reserves sounds like a good add-on. Thanks Chris. I'll look into Quickbooks. It seems like I've previously seen one of their programs expressly for rental income.
One account per unit seems like overkill. Many of our clients have one account for multiple properties. I do agree that accounting software, or at least a solid spreadsheet, would be a good start for bookkeeping purposes. You may want to look into REI Hub.
If the properties are in separate entities, then they need separate accounts. If they are all part of the same entity, I would have one checking and one savings account. Follow the KISS concept to reduce time and errors.
You need to track expenses and income separately, but that is done in a spreadsheet or in management software.
Hmmm. I may start one account for each properties regardless of how many units a property has. I'll check out REI Hub. Thanks Daniel.
I agree that I need checking and savings accounts.
What is the KISS concept?