Self Managing Multiple Portfolio's
Hello Friends! As a brand new investor I own two portfolio's totaling 11 properties consisting of 19 & 16 Units. Both portfolios are owner financed and in two different LLC's. I am self managing for now as I want to get the experience before hiring a property manager. I am currently using Doorloop software and would like to know if anyone out there is in a similar situation that would be willing to discuss how they set up the bank and owner accounts etc... Would love to hear from anyone that owns and self manages. Best Software? Helpful Advise Appriciated!
#3 Managing Your Property Contributor
- Property Manager
- Grants Pass, OR
- 163
- Votes |
- 375
- Posts
#3 Managing Your Property Contributor
- Property Manager
- Grants Pass, OR
@David Kirkpatrick Doorloop is a brand new platform, so you'll find that very very few people have experience with it. There are a lot of alternatives that have been around a bit longer, but if you find that your current software does meet you needs and you've already spent time entering all your data into it, it may be worthwhile to stick with it.
If you find it doesn't support multiple portfolios in the way you need it to, there's many many other options out there that would.
The more mature platforms that are designed for landlords/property managers include Rentec Direct, Buildium, Appfolio, Propertyware, and Rent Manager.
There's also a number of low-cost platforms available that are able to offer you a lower price by passing along some of the costs to your tenants (payment processing fees, applications, tenant screening, etc). These platforms include RentRedi, Stessa, Avail, Innago, Apartments.com (formerly Cozy), and TenantCloud.
Regardless which platform you go with, be sure to keep the accounting for each LLC entirely separate otherwise you risk breaking the "limited liability" concept of LLCs. In most platforms this means adding a bank account, and connecting LLC 1 to that bank account and all transactions should flow into it. Then LLC 2 goes into a separate bank account. All your reports, when run for informational and tax reporting, should be able to be separate as well. Finally, if you have any employees, be sure employees for LLC 1 do not have access to any information for LLC 2 unless they work for both organizations.
#1 Classifieds Contributor
Setup a bank account for each LLC's Operating Account.
You can probably have one account for the security deposits.
You need two accounts: checking and savings. If the properties are split into more than one LLC, then each LLC will need its own accounts.
Checking: collect all income here, then use it to pay bills. Pay the mortgage. Pay for maintenance. If you are setting aside funds for capex, taxes, insurance, or other expenses that don't occur monthly, transfer those funds to Savings each month and hold them there until it's time to spend them. You will receive the security deposit in Checking but then transfer it to Savings.
Savings: Hold the deposit here so it's separate from operating funds. You can also hold money for maintenance, capex, taxes, insurance, or other projected expenses. When a tenant moves out, transfer the deposit back to Checking so it's ready to apply towards expenses or to refund to the Tenant.
If you end up with excess funds in the Checking account, I recommend you transfer it to a third account that is specifically designated for future investments. That ensures you don't spend it on other things and that you know exactly how much you have available to spend on the next purchase. If it's mixed in with your deposits and reserve funds, you may accidentally spend money you shouldn't have.
Quote from @Nathan Miller:
@David Kirkpatrick Doorloop is a brand new platform, so you'll find that very very few people have experience with it. There are a lot of alternatives that have been around a bit longer, but if you find that your current software does meet you needs and you've already spent time entering all your data into it, it may be worthwhile to stick with it.
If you find it doesn't support multiple portfolios in the way you need it to, there's many many other options out there that would.
The more mature platforms that are designed for landlords/property managers include Rentec Direct, Buildium, Appfolio, Propertyware, and Rent Manager.
There's also a number of low-cost platforms available that are able to offer you a lower price by passing along some of the costs to your tenants (payment processing fees, applications, tenant screening, etc). These platforms include RentRedi, Stessa, Avail, Innago, Apartments.com (formerly Cozy), and TenantCloud.
Regardless which platform you go with, be sure to keep the accounting for each LLC entirely separate otherwise you risk breaking the "limited liability" concept of LLCs. In most platforms this means adding a bank account, and connecting LLC 1 to that bank account and all transactions should flow into it. Then LLC 2 goes into a separate bank account. All your reports, when run for informational and tax reporting, should be able to be separate as well. Finally, if you have any employees, be sure employees for LLC 1 do not have access to any information for LLC 2 unless they work for both organizations.
Thank you So Much for the information. I am grateful and will do my best to impliment this strategy!
Quote from @Nathan Gesner:
You need two accounts: checking and savings. If the properties are split into more than one LLC, then each LLC will need its own accounts.
Checking: collect all income here, then use it to pay bills. Pay the mortgage. Pay for maintenance. If you are setting aside funds for capex, taxes, insurance, or other expenses that don't occur monthly, transfer those funds to Savings each month and hold them there until it's time to spend them. You will receive the security deposit in Checking but then transfer it to Savings.
Savings: Hold the deposit here so it's separate from operating funds. You can also hold money for maintenance, capex, taxes, insurance, or other projected expenses. When a tenant moves out, transfer the deposit back to Checking so it's ready to apply towards expenses or to refund to the Tenant.
If you end up with excess funds in the Checking account, I recommend you transfer it to a third account that is specifically designated for future investments. That ensures you don't spend it on other things and that you know exactly how much you have available to spend on the next purchase. If it's mixed in with your deposits and reserve funds, you may accidentally spend money you shouldn't have.
Great Points!! I had not considered transferring all of our leftover funds into the savings but it does sound like a good structure!