Converting our primary residence into rental income property this summer, and since we will be out of state, we opted to use property manager (so they get 10% of the rent).
I'd like to open new account solely for collecting rental income and paying the mortgage on the rental property for easier recordkeeping (as well as fixes and anything else for the property).
I've been researching DepositAccounts.com for some ideas, and I do have some candidates. But my research is far from done. I've gathered that I probaby do not want a reward checking account since they usually require 10 or more transactions a month, and I do not foresee having that many per month. But MMA, saving, accounts with access to CDs, etc might make sense.
Was wondering if any Bogleheads here went through similar experience and found an account that works well whose sole purpose is for rental income and a couple of payments (monthly mortgage, HOA fee one time annually). I will put in some cushion as an initial deposit. Mainly, I'm looking for a good balance between jumping through hoops/restrictions and finding the best interest rate I can find.
Looking for new account suggestions for rental income
- cflannagan
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- Location: Working Remotely
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Re: Looking for new account suggestions for rental income
My primary bank is Wells fargo and I just created a separate personal account for the rental. There was no cost for this.
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Re: Looking for new account suggestions for rental income
Very similar situation here. I own a rental home that is out of state, use a property management company for that, and have a separate account that is just for the rental home income/mortgage payment/costs. I simply went through a local credit union for that account. It has a good rate on the first $500 in the account and then the typical LOW rate after that, I keep a little cushion of extra cash in the account, rent goes in, and mortgage payment goes out. I also have $100 from each paycheck direct deposited in the account just to keep it a little more active and slowly build up the cushion there. Works for me.
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Re: Looking for new account suggestions for rental income
Separate account at wherever your other accounts are is probably most convenient (for ease of transporting money back and forth which may be required). Also depends somewhat on whether rent checks are coming directly to you (and then you pay PM) or if they are collected by PM (who then pays you).
I don't have a PM and as for local vs. online, I use both. I have a range of tenants (from lower middle to upper middle class), and some are unbanked, paying in cash types.
Online banks tend to have perks like paying interest and especially free remote check deposit (personally I use Ally).
Local banks are more convenient for depositing cash or money orders (often can't be done with online deposit). In addition, cash-paying tenants can be given deposit slips to deposit the rent directly into your rental account at a physical branch.
I don't have a PM and as for local vs. online, I use both. I have a range of tenants (from lower middle to upper middle class), and some are unbanked, paying in cash types.
Online banks tend to have perks like paying interest and especially free remote check deposit (personally I use Ally).
Local banks are more convenient for depositing cash or money orders (often can't be done with online deposit). In addition, cash-paying tenants can be given deposit slips to deposit the rent directly into your rental account at a physical branch.
- cflannagan
- Posts: 1208
- Joined: Sun Oct 21, 2007 11:44 am
- Location: Working Remotely
Re: Looking for new account suggestions for rental income
Checks will come from PM - they asked if I wanted to do direct deposit so I'll use that option, and nice thing is PM will also provide me with year-end tax documentation (although I believe I'll still need to calculate a few things on my own).rogermexico wrote:Separate account at wherever your other accounts are is probably most convenient (for ease of transporting money back and forth which may be required). Also depends somewhat on whether rent checks are coming directly to you (and then you pay PM) or if they are collected by PM (who then pays you).
I don't have a PM and as for local vs. online, I use both. I have a range of tenants (from lower middle to upper middle class), and some are unbanked, paying in cash types.
Online banks tend to have perks like paying interest and especially free remote check deposit (personally I use Ally).
Local banks are more convenient for depositing cash or money orders (often can't be done with online deposit). In addition, cash-paying tenants can be given deposit slips to deposit the rent directly into your rental account at a physical branch.
I was also looking at Ally Bank, they have 0.85% interest rate. Or possibly use Penfed (already have account there, plus the mortgage on the rental property is with them too) and use their CDs.
Re: Looking for new account suggestions for rental income
That's how mine works also. The PM collects the rent and direct deposits it into my account. They run the show, so I don't think there is any other option than the PM collecting the rent. They will, or at least mine does, also give you all the year end numbers you need for taxes. Yes, the expenses, small repairs, advertising, and whatever aren't added up for you so there is a little math involved. But, it's all laid out... and easily worth the 10% I pay them, since I'm also an out of state landlord.
I also use Ally for my emergency fund and keep some cash there. I could combine the rental stuff with that to simplify things. But, I like having that as it's very own account and like to be part of a local credit union. Plenty of options for the rental account though.
I also use Ally for my emergency fund and keep some cash there. I could combine the rental stuff with that to simplify things. But, I like having that as it's very own account and like to be part of a local credit union. Plenty of options for the rental account though.