Income/expense account management

[ceciliasdad]

I'd like to hear your thoughts about a strategy I plan to use in order to manage incoming/outgoing money from my rentals. I expect to have 6 individual units when all deals finalize. My goal is to minimize my personal involvement, separate my personal finances and track detailed income/expenses. I also want to position my management to be well viewed by future lenders.

Accounts
#1: used for accepting and temporarily holding rent payments until they can be shuffled on to monthly, auto-payed expenses (mortgage, escrow account #2, repair savings). This account will maintain at least three months of regular monthly expenses.
#2: a savings account used as escrow for annual taxes and insurance
#3: a savings account used for saving cash for repairs and other unplanned expenses.

Process:
Each month, rents come into account #1, payments are made to monthly expenses (mortgage, etc.), escrow (account #2) and repair savings (account #3). If there is anything left over (profit), it goes to my personal account. I will probably use mint to track detailed, by unit, expenses along with budgets unless I can find a bank or other service that will enable me to do something similar.

Thoughts?  How do you do it currently?

[CashFlowDiaries]

Im pretty sure you can do all this using quickbooks but I do it the old fashioned way with a spreadsheet.  The spreadsheet is configured exactly for rental income and expenses and its actually a great tool. Ill PM it to you so you can check it out.

[NoNonsenseLandlord]

You only need one account, and use Quicken to track the allocations.  It doesn't hurt to have the accounts.  I am not sure if you will minimize any personal involvement...  You may want an account fro tenants deposits.

I only have one business account, although I can transfer funds between my investment account or my personal account.  All rents go in, expenses for the month are paid, and the rest is transferred out.

[frugally]

What is the rationale behind having the third account?  I have things set up pretty similar but only have one account for incoming rent and all expenses.  I also use a spreadsheet (and would have one for each individual property, but I only have one) for managing things easily for taxes.

[Blindsquirrel]

 We have one business checking account for the LLC- it will interface with Quick Books Pro, most of our charges are on a Lowe's business account that will dump purchases in Quick Books also.  Three accounts seems not needed to me but we are a small operation, 220K gross rents so not large at all.