3 Q's On Saving Income
Hey guys-
I am in the process of picking up some more rentals, and opening my own property management company for my own properties (God help me). These will all be lease options (I own them, but am leasing out to tenants). I assume I want to have the management company be a different entity from my LLC that's on title. I am thinking I need to setup a 'savings account' for each property that allows me to put a portion of my positive cashflow aside to use for vacancies, repairs, etc.
1) Do I just open up a business savings account at the bank and deposit funds each month into it from each rent check and use that? Do I use a separate savings account for EACH property, or just one big reserve account? Or, is there a better way to do this? My concerns are if a tenant tries to sue me, they can go after all those reserve funds I have built up from ALL my properties. Is there a good way to shield my reserve funds from lawsuits?
2) How much do you guys put away for a reserve on each property? I read somewhere that 35% is a good amount, but that seems a little high to me. I do plan on having a Home Warranty on the properties, so that should minimize costly repairs. I am also saving the 1st/last rent payment in the reserve as well. So how much to put away for each property?
3) Also, which kind of entity is best for a property management situation (I know LLC for holding property- already got that).
Any insights to this is appreciated...
Thanks!
D
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