Today I want to share with you a simple idea which could save you thousands of dollars as a real estate investor. It’s so simple that you may want to ignore this advice, but remember, doing the simple things in life is what makes people successful.
So what am I talking about? Well, how many bank accounts do you have? I personally have 5 different accounts with various LLC’s. I don’t believe in holding every property I own in its own LLC (I think that’s overkill).
But I do believe in holding a couple million worth of real estate in each LLC. For example, you might want to hold $2 million in one LLC, $2 million in another, etc. etc. etc.
However, once you have all of these bank accounts and once you have dozens of tenants paying you rent every month you need to be able to keep track of things.
Here’s what I mean:
Just last week I was checking my bank account and I noticed a tenant had bounced a rent check. I’ve never had a problem with this particular tenant so I immediately called him to see what was going on. He said that his work paycheck got delayed, he apologized for the bounced check and has since sent me a new check including the $6 bounced check fee.
You see, I’m sure there are landlords out there with dozens of properties who might have skipped over something like this. (I’m sure you’re nodding your head “not me, never”, but see what happens when you have 50 + properties on your hands). If I wouldn’t have caught this particular bounced check I would have been out $1,300.
My point is, you need to develop a system and be highly organized with your properties. For example, my system is based on certain days of the week. Every Wednesday I check my bank accounts to see what’s going on. That way I can see if I have any bounced rent checks or any other problems.
Then, once a check clears I enter the information into Quicken Rental software…
Which is extremely simple to use and makes things at tax time a heck of a lot easier. Like I said, today’s post was very simple… however, ignoring the advice of keeping an eye on your bank account and keeping organized with your rental payments could cost you a small fortune in the long run.
Sure, we’d like to think that most tenants would call us and give us a heads up on a check that might bounce or already did bounce – but we know that’s not the case the majority of the time, which is why it’s up to us to watch our money closely.