If I have two bank accounts one for the rent and for the security deposit, do these accounts have to be in both me and my wifes name if we both own the house? Or can the accounts just be in my name? Thank you!
Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
2y
@Jay Lam in Colorado a licensed property manager has to hold security deposits in a trust account. Now you aren't that "official" - but you should think about how to protect your tenant if something should happen to you. Holding the security deposit in its own account is a very good practice; but also make sure that there is some sort of "continuation" for that account. Your wife as joint tenant (even though she isn't an active manager she can still sign a check if need be), a child or trusted relative as a designated beneficiary (so the bank knows what to do with the money). It can be a personal account; but for recordkeeping, IRS, etc. don't co-mingle other non-business funds. When I had my own rentals I had two accounts (a checking and a savings). The checking was where rent deposits were made and month to month expenses such as water bills were paid. The savings had the security deposits and monthly deposits for longer term items (cap ex) like a new appliance, or paint, or roof. I chose to put 10% of the gross rent in there.
San Diego · Member since 2022 · 10 posts · 6 votes
2y
Is it stipulated in the tenant's lease agreement that both of you are designated as landlords, or is only one of you identified as the landlord?
It would be valid to assign the business account under the name of the owner who is more actively involved in managing the property. However, if it is convenient for you, you have the option to open a joint account as well.
Thank you! Both of us are designated as landlords. Can the account be a personal checking account instead of business because we have the property in our own names?
Real Estate Agent · Grand Junction, CO · Member since 2015 · 1k+ posts · 736 votes
2y
@Jay Lam in Colorado a licensed property manager has to hold security deposits in a trust account. Now you aren't that "official" - but you should think about how to protect your tenant if something should happen to you. Holding the security deposit in its own account is a very good practice; but also make sure that there is some sort of "continuation" for that account. Your wife as joint tenant (even though she isn't an active manager she can still sign a check if need be), a child or trusted relative as a designated beneficiary (so the bank knows what to do with the money). It can be a personal account; but for recordkeeping, IRS, etc. don't co-mingle other non-business funds. When I had my own rentals I had two accounts (a checking and a savings). The checking was where rent deposits were made and month to month expenses such as water bills were paid. The savings had the security deposits and monthly deposits for longer term items (cap ex) like a new appliance, or paint, or roof. I chose to put 10% of the gross rent in there.
Thank you! Both of us are designated as landlords. Can the account be a personal checking account instead of business because we have the property in our own names?
My parents are small, "Mom-and-Pop" landlords but only one of them oversees and manages their rental property. They share a personal account where only rental income is deposited, and I am listed as the beneficiary of their accounts at their bank.
Although this is technically a personal account, we still like to refer to it as a "business" account to internally emphasize the necessity of maintaining a clear distinction between these funds and other personal accounts.