Managing your finances is an important aspect of being a real estate agent and setting up a bank account is one of the first steps to take as a real estate agent. You might find yourself asking, “what are the best bank accounts for real estate agents?”
In this quick-read article, we’re covering some of the best bank accounts for real estate agents. Our focus was on picking banks that are good for new and solo real estate agents. If you manage a team, your banking needs are different and a bit more complex.
For solo and new real estate agents, the best bank accounts:
- Have no deposit limits
- No required minimum balances
- No transaction limits
- Decent overdraft protection
Here’s why: cash flow, or money coming in and out, tends to be erratic for new real estate agents.
It’s common for newer real estate agents — within their first three years — to have a $20,000 month and nothing the next month. During this time, a real estate agent will pay expenses and the bank account balance will drop lower and lower.
With erratic cash flow, you’re at risk for accidentally over-drafting, reaching deposit limits, incurring extra fees, and being under balance requirements.
Before we dive into the specific bank accounts, let’s talk about some common questions real estate agents have when it comes to banking.
Should Realtors Have Separate Bank Accounts?
In short, yes, realtors should have separate bank accounts which separate their business expenses from their personal expenses. For most real estate agents, this means opening up a personal account that is used ONLY for your real estate expenses and transactions.
As your career progresses and your business becomes more mature, you should transition over to a business bank account for liability purposes.
It is best practice to set up a business bank account when starting your real estate career. However, it requires you to file for an Articles of Organization and EIN.
If you’re a new agent, we recommend keeping it simple by opening up a separate personal account. For more established agents, you should definitely open up a business bank account.
There are several reasons you want to keep your business expenses separate from your personal expenses
- Makes tracking real estate expenses easier
- Keeps your personal finance budget clear
- Potentially creates liability protection
A shared bank account is going to make tasks more complicated and take longer come tax time. Imagine filtering through bank statements trying to separate business from personal expenses, then categorizing them.
Instead, with separate accounts you can pull your bank statements and categorize them.
How Many Bank Accounts Should A Real Estate Agent Have?
Real estate agents need at least one bank account, possibly more, depending on the size of their real estate business and their financial operating procedures.
For most real estate agents, a single checking account is sufficient. Many banks offer a bundled checking and savings account that allows you to easily transfer money.
If you’re a new real estate agent, one checking account is typically enough because as soon as commission money comes in, it goes right out. Often new agents get a new commission check and have bills to catch up on.
This kind of cash flow and spending pattern happens for the first year or two of a real estate agent’s career.
As commissions become more regular, we recommend real estate agents open up a few more bank accounts to run a profit first for real estate agents. This method allows agents to ensure they take a paycheck first and have enough cash to pay their tax bill come tax season.
As a rule of thumb, real estate agents should put 15 percent of each commission paycheck into a savings account that is left untouched until it comes time to pay the tax man.
You can adjust this number up and down if you’re properly recording your expenses in quickbooks on time. This will allow you to create a profit and loss statement and determine your tax liability throughout the year.
Best Banks For Real Estate Agents
CapitalOne
Best for: Agents that want online banking only and to scale to a profit-first model.
When I was getting started as a real estate agent, this is the bank I used and would recommend for most real estate agents.
CapitalOne has the ability to open up several accounts, transfer money in between, and has large check deposit limits. At the time of writing, the deposit limit on personal accounts is $40,000.
A real estate agent can create a personal checking account and run two more accounts for profits and taxes. After each commission check, you can move a certain percentage to your profit account and to your taxes account.
This will help you spend only the money you have.
The biggest downside with CapitalOne, unless you’re in a state like Texas, is there are no physical branches. So, accessing money if you need cash can be difficult at times. You would need to find an approved ATM.
PNC Bank
Best for: Agents that want a local branch with the tools and resources of a national brand.
PNC has many of the online, digital features that you can see with CapitalOne and has physical branch locations throughout the United States.
The biggest feature of PNC is the virtual wallet which combines your bank accounts — checking and savings — into a single bank product.
When it comes to tracking expenses and budgeting, PNC virtual wallet can go a long way in helping real estate agents.
Huntington Bank
Best for: Real estate agents that want more of a local bank.
Huntington Bank is growing and has taken over former banks, such as TCF bank, a Detroit-based bank. You will not find Huntington Banks throughout the United States as they are mostly located in the Midwest and parts of the South.
Huntington offers three checking account options. All three come with a 24-hour grace period, which gives you one full day to replace your funds when you overdraw from your account.
They also all offer free overdraft protection so you can connect your checking account to another Huntington account that will transfer funds if you risk overdrawing.
Must be a resident of Colorado, Florida, Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, West Virginia, or Wisconsin to open an account.
Support Your Local Bank
Best for: Agents that want to build their communities
One of the best things you can do as a real estate agent is find a local bank or credit union to support. When you deposit your funds in a bank account with a local bank, those funds are reinvested into your community to buy homes, start businesses, and build communities.
As a real estate agent, your job is all about the community and selling a home in that community. You can develop your community by developing banking relationships with your community credit union.
Who knows… you might be able to get some business and clients out of it.
In Lansing, we have Michigan State University Federal Credit Union. Near Detroit, we have Downriver Federal Credit Union.
Which Account Is Right For You?
One of the bank accounts listed may meet your needs. When evaluating the different accounts, it’s important to consider your situation and banking needs.
Here are some things you should consider:
- How much funds you have: If you don’t have much cash on hand, then you need to look for an account without minimum balances. It’s hard to let $10,000 sit in a bank account to avoid fees when getting started in real estate. That cash could be used to get more clients.
- Bundled Services: Banks offer different products and services like budgeting, transaction review, virtual wallets, and more. Consider how you want to track your expenses and finances.
- Your Location: some of the banks that made our list may be inaccessible for you. You may want an online bank or prefer to bank in-person.
Final Thoughts On Bank Accounts
Early in your real estate career, it’s a good idea to keep it simple. Pick the account that won’t penalize you for making large deposits and having low cash balances.
As you become more sophisticated in your real estate career, you can change your bank accounts and look for new relationships. Along the way, you’re going to switch to business accounts, probably open up a business credit card, and more.
Shop around and pick the bank account that is right for you. Your bank account plays a small role in the overall financial success of your real estate career.
