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Hi All,
Can some landlords in the group that own multiple rentals give some feedback as to how do they manage the rental income/security deposits? Do you setup different bank accounts for each individual property? Do you use a checking, savings account or both? I think some states require that the security deposits be held on savings accounts.
A few years back someone told me that some banks have Business Accounts that allow to have some sort of “sub-accounts” that you could setup for each different property, all under the same main account. I have done some research on this but have not found much on it.
Thanks in advance,
RafaelI agree with Don. Security deposits are the #1 reason landlords end up in court with tenant disputes. Instead, they can pay an Option payment for a right to renew their lease at the end of the year with a guarantee that the rents will not go up more than ____% (usually 5 10 10%)
For collecting rent, either allow your tenants to deposit money directly in to an account or do ACH. Then you don’t need to collect rent checks which could get delayed in the mail or lost. When you collect rent this way, you are much more likely to get ON TIME rent payments
I have a special account that my tenants deposit money in to automatically with online transfers. Once the money is there, it is swept in to my regular property management account. The tenants never have the account number for the property management account. And the account where tenants make deposits rarely has more than $200 in the account.
Crazy thing… in Panama it is customary for landlords and other businesses to give their bank account number to anyone so they can easily transfer money in to the account.
One thing I wasn’t clear on with Tilney’s class is what happens beyond the first year when the tenant exercises the rent lock option. At that point, you’ve collected the consideration which is equal to a month’s rent, but is unrefundable. You wouldn’t do this year after year, so what happens after the first year? All you need is that one option consideration to use as a basis for their performance bonus.
I had meant to ask this on Tilney’s email list, but never have. If anyone can clarify, that would be great.
Rafael
The tenants all deposit in to the same account. Each of them has a different rent amount so I can easily determine which rent goes to which property. When they use a deposit slip to make their deposit, they write the property address on the form.
Bill
You only need that one option consideration. It does not need to be paid again each year. Even though the tenants no longer have a “rent lock” in place, if they pay on time, don’t bother you, and take good care of the property.. when it comes time to send their renewal letter, you can tell them that you normally increase rent 10% each year but because they are such great tenants, you will only increase their rent 5% if they renew their lease. When faced with the cost of moving vs. the rent increase, most tenants will stay.
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