What bank accounts are important for my real estate investment company

Chapter 7: Step 6

Go to the bank Open up Business accounts.

Time: 2 hours, day 2 (Note, that in some states you may have to wait a while to get the verification of your entity from the state so you may have to wait for that, if so, move on to the next steps and do this as soon as you can).

Find a nice bank that gives free business accounts and has branches that are accessible to tenants and contractors in the areas that you are investing in.  Ask for free online billpay and free online account management.  In most cases both of these are free, but sometimes they make you pay a small fee for it.  If the bank is known to be a good lender you may want to consider playing by their rules.

Landlords:

  1. For the LLC that is holding the assets Open 1 account:

    1. Call it “<MY Asset LLC> operating account” – That’s enough thinking for this one.

  2. For the LLC that is the [Property] Management company open the following accounts:

    1. “<Operating LLC> operating account”

    2. 2 + the number of units you plan to buy in the first 3 months.  Name them “Unit 1”, “Unit 2”….

      1. I have all my tenants pay rent to their own account and they deposit their funds right with the bank.  This way they are not bothering me and they get a receipt from the bank.

      2. This gives your a couple extra accounts incase you have one that you need to evict and leave them with a way to pay what they owe and to use for collections for that tenant.

    3. “Deposits” – try to make this interest bearing, but if not, it’s ok.

    4. “<MY asset LLC> customer” – For each asset company you manage, have a “Customer account for it.  Remember, that the Management company LLC is treating the other LLC’s like customers.  This is for asset protection reasons that are too complex for a start up guide.  The newsletters that you signed up for earlier will explain it in greater detail.

    5. Optional.  If you are very detail oriented and have the goal of bank financing do the following>

      1. For each building, Open an account.

        1. IE. 123 Main st (even if it is a multi Unit building), 124 Main St…

        2. Pay all builds for that property from this account.

          1. Use Web Bill pay and auto pay options

        3. Set up the Customer account as the overdraft account.

  3. Pre fill out Deposit slips with the account numbers and basic details for your tenants.  Fill out 12 slips for each unit, you can address them now, or later, but put on the account numbers and other required information.

Flippers:

Flippers can get away with one account.  Just make sure that when you write checks you put the job in the memo to simplify your bookkeeping.

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