I’ve been asked this question in the Property Investment Mastery Facebook Group: Do I have separate account or run it from my current account when thinking about budgeting for property investments.
To start with, it really depends on how good you are at managing your finances.
Unless I have a system in place, I’m pretty terrible at managing all of my finances from one bank account. I get confused at what money to allocate where. It can make me overspend because I think things are good, or underspend because I’m panicking about spending everything.
One bank account doesn’t work for me. Plus, I’m a surveyor. It’s drilled into us that for every single property you need to have a separate bank account.
This works really well.
For every property you own open a separate bank account and have your tenants pay into the bank account related to the property that they are living in.
Not only is this a really good budgeting tool as you can see how much is coming in and going out for your properties… just download the transaction spreadsheet and you can separate your expenses out into categories (Super handy for your accountant at the end of the year too!)
It’s also great for benchmarking. Once your income and expenditure, you can compare this to previous years and even other properties. So, you’ll be able to see if any tweaks need to be made.
Another good tip is taking this one step further and every time you are saving to buy a new property, opening up a separate bank account and putting your money in there. You can set a target, which will make you stick to the plan. When you hit that target then you get to buy a property.
Best of all, these accounts are free. I bank with NatWest, when I’m on online banking I can simply click to open up another bank account with them. It’s a basic account, no fee, no overdraft, no bells and whistles. Just a place to deposit money with an account number and sort code. I then change the name to the property’s name. Voila… a separate bank account.
I hope that answers your question, I recommend a separate bank account, and don’t worry it couldn’t be easier! Let me know how you get on in the comments section below.
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