Property management access to bank account(s)

Managing Your Property
1yFollow

Property management access to bank account(s)

Seth Franklin
Rental Property Investor · Houston, TX · Member since 2021 · 7 posts · 4 votes

We are currently exploring a particular property management company. The management company requested to have access to the bank accounts for the rental property. Is this a common practice? Can we put something in the contract that prevents them from racking up unnecessary charges? If it is an account, can it be set up so that we're obligated to keep a minimum amount in the account for the property management to draw from when needed and when it gets low we can transfer money into the account?  

Thanks for your response & time! 

1Reply
42 views

Most Popular Reply

Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1y

Sounds like you have an apartment complex?

Most PMC's collect rent and deposit in their account, pay expenses from this account (including PMC fees) and then forward remaining funds to owners - less Portfolio Minimum.

Larger apartment complexes will be owned by an LLC, which will have it's own bank account for rent deposits. It is common for the PMC to have access to this account to:

1) Know which tenants have paid - and which ones haven't

2) Pay expenses - utility bills, landscaping, maintenance, etc.

3) Pay themselves

How else do you expect them to be able to do all of the above, without having to get your approval daily?

[email protected]248-209-6824
Logical Property Management4.9450 Reviews
WebsiteView Page
3Reply
See this reply in the discussion

10 Replies

Jump to latestLatest
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1y

    Sounds like you have an apartment complex?

    Most PMC's collect rent and deposit in their account, pay expenses from this account (including PMC fees) and then forward remaining funds to owners - less Portfolio Minimum.

    Larger apartment complexes will be owned by an LLC, which will have it's own bank account for rent deposits. It is common for the PMC to have access to this account to:

    1) Know which tenants have paid - and which ones haven't

    2) Pay expenses - utility bills, landscaping, maintenance, etc.

    3) Pay themselves

    How else do you expect them to be able to do all of the above, without having to get your approval daily?

    [email protected]248-209-6824
    Logical Property Management4.9450 Reviews
    WebsiteView Page
    3Reply
    • Seth Franklin
      OP
      Rental Property Investor · Houston, TX · Member since 2021 · 7 posts · 4 votes
      1y
      Quote from @Drew Sygit:

      Sounds like you have an apartment complex?

      Most PMC's collect rent and deposit in their account, pay expenses from this account (including PMC fees) and then forward remaining funds to owners - less Portfolio Minimum.

      Larger apartment complexes will be owned by an LLC, which will have it's own bank account for rent deposits. It is common for the PMC to have access to this account to:

      1) Know which tenants have paid - and which ones haven't

      2) Pay expenses - utility bills, landscaping, maintenance, etc.

      3) Pay themselves

      How else do you expect them to be able to do all of the above, without having to get your approval daily?


       Thanks for your response!

      The management company would actually be for a small portfolio of SFHs. Just wanted to ensure the company couldn't run rampant with charges when there could have been a more cost effective approach. 

      0Reply
  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    1y

    At the face value of this, it might seem that there are many different ways a company can get in a place to rack up many different charges. Typically, the PM company will get stuff in writing that is anything over $500.00 or a certain agreed amount. This is for the ease and purpose of not calling you every month about something small that needs to be fixed. If you want to have the PM company to call you on every fix they can do that too I am sure. Some PM companies due uncharge on repair fees etc. so just read the contract accordingly. 

    The access to your bank account, is just account number and routing number so that they can intake rent then send rent to you minus PM fees and any repairs in that month. This limits the amount of times you get calls, text, and interpret throughout the day/month for a possible minor fix on the rental. It is really for ease and "passive" income on your rental(s).

    The McKernan Group4.954 Reviews
    WebsiteView Page
    1Reply
  • Trey Maclin
    Property Manager · Eastern Region, US · Member since 2023 · 39 posts · 16 votes
    1y
    Quote from @Seth Franklin:

    We are currently exploring a particular property management company. The management company requested to have access to the bank accounts for the rental property. Is this a common practice? Can we put something in the contract that prevents them from racking up unnecessary charges? If it is an account, can it be set up so that we're obligated to keep a minimum amount in the account for the property management to draw from when needed and when it gets low we can transfer money into the account?  

    Thanks for your response & time! 

     Fairly standard, just be careful to read and understand the property reserve amounts, the maintenance limit, etc., i.e. the rules that describe when the money can and can't be used and for what purpose. 

    Depending on the company and services offered, PMs function as a legal agent and middle-man for rent collection, property maintenance, etc - this is difficult to do if the owner needs a touch-base for every action. The idea is to allow some wiggle room to handle the small repairs but force a conversation for anything above the maintenance limit, which should require owner approval and contribution prior to beginning any work. 

    1Reply
    • Seth Franklin
      OP
      Rental Property Investor · Houston, TX · Member since 2021 · 7 posts · 4 votes
      1y
      Quote from @Trey Maclin:

      Thanks for your input, Trey! 
      1Reply
  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    1y

    @Drew Sygit @Seth Franklin

    Drew is spot on. I have only not used our PMC bank account for large scale rentals 50+ units. 

    [email protected]239-339-3969
    Bartomeo Property Management4.7150 Reviews
    WebsiteView Page
    2Reply
  • Seth Franklin
    OP
    Rental Property Investor · Houston, TX · Member since 2021 · 7 posts · 4 votes
    1y
    Quote from @Tom Woodhouse:

     Thanks for your suggestion, Tom! 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free