Simple Asset Management Systems To Avoid A Tax Nightmare

In this episode, we cover how to set up your accounts to easily track your expenses and simplify your tax process. --- Transcript   Emil: Hey everyone, welcome back for another episode of The Remote Real Estate Investor. My name is Emil Shour and today I'm joined by my co hosts,   Tom: Tom Schneider,   Michael: and Michael Albaum.   Emil: And today we're gonna be tackling getting your financial house in order. So a friend of mine hit me up on Twitter asking for accounting best practices. So we're gonna read his question and start tackling it piece by piece to show you how we do our accounting and keep everything in order. So let's hop into this episode.   Emil: Alright guys, so I'm going to read Alvin's message to me and then we'll start tackling it.   So, hey Emil, fan of the pod think y'all are doing some awesome work there. Thanks, Alvin. One potential topic to consider for an upcoming podcast is accounting best practices. I'm just getting started with my first property in one area that I'm wrapping my head around is how to best set up bank accounts, like operations, reserves, etc. credit cards, all those things. So I'm not dealing with a tax nightmare next April. Thanks for considering and keep up the awesome work.   All right, Alvin, this is a great question. I think we, I think we covered it inside of an AMA. But we wanted to break it out and dedicate its own episode, because it's definitely a good topic and something to think about, especially as you're you're just getting started. So do you guys either one of you guys want to start just mentioned how you set up your financial accounts, either checking savings, things like that   Tom: I’ll lead the way, so I probably have a super simple structure. So I have one separate bank account that I took out through one of the big banks and with that account, I to connect my mortgage payments to it. So I do an automatic withdrawal to pay that within the mortgage accounts themselves, I will have an escrow in there where they'll take out a little bit extra every month to manage my taxes and insurance. So I don't have to worry about that throughout the year. But if I want to be more proactive and not let them have my float of escrow account, I could pay that you know when it's due, but I like the past 70 of just setting up that impound account.   So you know, checking account automatic payments in and out to the mortgage and kind of a similar structure with my individual property managers where I have my bank account connected with my property manager, and they hold a little impound account where with each property that they manage for me, depending on how many that property manager manages, they'll keep a couple extra couple $100 if any maintenance or issues come up, and I set up with them a not to exceed limit. So if the price of any work that they're going to do is over 200 bucks, I want to know about it. If not I trust my property managers with most of them. I've been using them for over a year. So I feel okay about them making decisions on some smaller stuff.   You know, I never thought about until this episode that with both of these sort of key partners that I have I let them both have a little bit of an impound account. So I have, you know, my main checking account where funds are coming in funds are going out. And then both with a lender as well as with the property manager, they both have little escrow accounts to manage the stuff that they have to pay via insurance or taxes or any maintenance stuff.   Beyond that I don't have a credit card that I use for any real estate stuff that I do the most of the transaction that I'm making. Personally, you know, outside of the initial acquisition and end and downpayment in acquiring the property, there isn't really a lot of transactions that I make that would be manual, everything is is pretty automatic set and forget it, you know, monthly money in pumping money out and then these two little separate escrow.   Emil: It's