Distribute Profits From Your Real Estate Business

As a house flipper, managing your finances is crucial to your success. Proper financial management ensures that you have enough money to invest in properties, pay for renovations, and cover other expenses related to your business. In this blog post, we’ll cover some of the most common questions that house flippers have regarding finances.

What is the best number of bank accounts to open?

One common question that house flippers have is how many bank accounts they should set up. You should answer this particular question based on your business needs. However, you should generally have at least two separate bank accounts – one for your operations and one for your profits and taxes. If possible, you should also consider setting up a separate account for your salary.

For example, you could have a main checking account with a bank like Chase for your day-to-day operations. Then, you could set up separate accounts with an online bank like Ally for your profits and taxes. By having separate accounts, you can easily keep track of your finances and ensure that you’re not overspending.

How Often Should You Distribute Profit?

Another common question that house flippers have is how often they should distribute profit. Again, the answer to this question depends on your business needs. Some house flippers choose to distribute profits every month, while others do it once a quarter or even once a year.

If you’re starting out and only doing a few deals a year, you might want to distribute profits once a quarter. However, if you’re closing one or two deals every month, you should distribute profits every month. The key is allocating money to different accounts based on their purpose so you know how much you spend on operating expenses versus profit and taxes.

Tips for Personal Finances

Finally, it’s also essential to keep your finances in check. One tip is to allocate a portion of your take-home pay to savings before spending any money on personal expenses. For example, if you take home $5,000 per month, you could put $1,000 into savings and use the remaining $4,000 for personal expenses. This way, you’re saving money while also covering your personal expenses.

In conclusion, managing your finances as a house flipper is crucial to your success. By setting up separate bank accounts, allocating money to different accounts based on their purpose, and saving a portion of your take-home pay before spending any money on personal expenses, you can maintain a healthy balance between your business and personal finances.