Best Banks for Real Estate Investors and Homeowners

When buying rental property, the learning curve is often steep. You need to understand the market, understand how to finance the purchase of a property and learn how to screen tenants. You’ve probably heard horror stories involving unpaid rent, broken toilets, or trouble with HOAs.

Even the basics of real estate investing can be difficult to master. All of pay quarterly taxes Separating your business and personal finances is new to many real estate investors.

If you don’t have a plan to streamline your business, your bookkeeping can turn out to be an even bigger nightmare than a leaky toilet or delinquent tenants.

In this post, we explain:

• What to look for in a bank for your real estate investments
• The best banks for your investments
• Why getting your business banking setup is so important

My experience as an owner

As a real estate investor, I’ve made just about every mistake in the book when it comes to selecting a lead institution for my real estate business.

I mixed business and personal finance. I chose banks that do not allow mobile or cash deposits. More than once I’ve picked banks that closed after a year or two, forcing me to recreate all my accounts at another bank.

What to look for in a real estate bank

• No monthly maintenance fees. Business bank accounts often carry fees of $15 to $20 per month or more. But there’s really no reason to pay these fees unless you’re doing a lot of business. In general you can find free checking accounts that will meet your real estate needs.

• Several ways to accept money. You may be considering raising money through online collections, but you never really know how your tenants will actually pay you. I received cash, money orders and personal checks even though my lease clearly states that I only accept online payments. At the end of the day, I’m not refusing tenants’ money. Find a bank that lets you deposit cash and checks so you can get the money to the right place.

• Integration with other accounting and management tools. If you use accounting software or any other rental management software, you will want your software to connect to the bank account. Two of the banks we recommend below are designed as integrations with end-to-end rental property management tools. The other banks are not specifically integrated with management tools, but they do connect to accounting and other management software.

• No transaction limits. Some business accounts charge a fee if you make more than 20, 40, 50, or 100 trades per month. Although rental properties generally don’t require a lot of payments, these limits seem unnecessarily frustrating to work around.

• Beware of new institutions that may close after a few years. New online banks or FinTechs often offer great incentives like high returns, account opening bonuses, and more. But they might not be successful in the long run. If your bank closes, you may not have access to funds in your account for weeks or even months. In addition to this, you will need to create a new account with new payments. It’s a huge pain, so be aware of that when researching and go with a more established institution if you’re interested.

“Overrated” banking features

While the above features are essential for real estate investors, there are a few features that new real estate investors may overemphasize. Here are a few :

• Access to loan products. In general, real estate investors use financing to buy a property. However, your primary real estate bank doesn’t need to be known for lending to real estate investors. If you are buying single-family homes or small multi-family homes, a mortgage broker is more important than a banker. They can help you shop for mortgages in different banks depending on your current needs. Mortgage brokers can also help establish home equity lines of credit or refinance homes to cash in equity to buy new investments.

• High Yield Chequing Accounts. Right now you can earn amazing returns when you put money into high performance verification or savings accounts. But the money you earn from real estate will often be reinvested in a future real estate purchase or used to pay off a mortgage. If you can find a high yield, that’s great. But it’s not the end of the world if you have to transfer money to a higher-yielding account once a quarter.

The 5 Best Banks for Real Estate Investors

Based on the criteria defined above, these are our top five banks for real estate investors.

1. Baselane

Baselane is an integrated management and banking solution for owners. Founded in 2020, the company offers free business verification for owners. The Baselane system includes beautiful reports, high account yields, and access to loans and insurance products designed for homeowners.

Account Highlights:

• Fully integrated with tenant screening and rental collection systems
• Accepts mobile check deposits
• Accepts cash deposits at Allpoint ATMs
• 3.3% ABS
• 1% cash back on all debit card purchases + Up to 5% cash back on the first $2,000 spent
• No transaction limit
• Home loans are available
• Property insurance is available

Account Risks:

• Created only in 2020
• Clunky to switch to Baselane if you use an alternative rent collection system

Stessa is a recent outgrowth of Roofstock, a well-established turnkey real estate company. Stessa was founded in 2016 but was more recently acquired by Roofstock. The company offers both free and paid solutions to homeowners.

Account Highlights:

• Free integration with property management software
• Some free reports
• Earn up to 4.55% APY
• Mobile Check Deposits
• Receive Appendix E with a paid subscription to Stessa Pro

Account Risks:

• No ability to deposit money into accounts
• Stessa Pro costs $20 per month or $192 per year

Axos Bank is a digital first bank that provides free business verification for a range of businesses. As well as being a great place for your business checking account, Axos is a full-service bank that offers high-yield savings, CDs, and more.

Account Highlights:

• Up to $200 for opening a new account
• Accepts mobile check deposits
• Accepts cash deposits at Allpoint ATMs
• Reimburses up to 2 household sons per month
• Accepts a range of business types
• Access to a full-service merchant bank

Account Risks:

• Need to set up external accounting tools
• You will not earn interest when using Business Basic Checking
• No more than 60 remote deposits each month
• $5,000 minimum daily balance to waive monthly business interest verification fee

Founded in 1999, First internet bank is a pioneer in digital banking, but it continues to push the boundaries to serve its customers. Its award-winning Do More Business Checking account has no minimum or monthly fee.

The account is ideal for homeowners looking for an established bank to set up their finances.

Account Highlights:

• No minimums or monthly fees
• No transaction limit
• Earn 0.5% APY
• Mobile Check Deposits
• Cash deposits at ATMs
• Reimbursement of up to $10 in ATM fees
• Access to high yield savings and other banking products

Account Risks:

• Cash deposited at ATMs is not immediately available

Federal Digital Credit Union (DCU) offers robust free verification options for member business owners. To join DCU, you must join a member organization or be eligible through an employer or community sponsor.

Member organization membership fees start from $10. Despite the inclusion of the word digital, DCU has branches in the northeast as well as mobile banking options.

Account Highlights:

• No minimums or monthly fees
• Up to 20 transactions per day
• Mobile Check Deposits
• Cash deposits at ATMs
• Access to over 80,000 ATMs
• Reimbursement of up to $10 in ATM fees
• Access to high yield savings and other banking products

Account Risks:

• Earn only 0.1% APY
• Must be eligible to become a member of DCU
• Pay $0.10 per deposit if you deposit more than 20 items per day

Create a separate real estate bank

Every business checking account has pros and cons and none of the accounts listed are perfect. The most important thing is to separate your finances as quickly as possible.

Account bookkeeping becomes simple when you keep your real estate finances out of your personal finances. And if you’re struggling to make a profit from your rental properties, you want to know how much you’re losing each month.

Do yourself a favor and open a real estate checking account before you start investing in real estate or as soon as possible. Just like your personal banking services, be sure to opt for the one that best suits your preferences and business needs.