Bill Paying...from personal acc\cc or via property manager

Hi All,

Quick process question. For those with 2-3 properties +, do you pay for your general property expenses from:

- Personal\offset account
- Personal credit card
- Have your property manager pay for bills out of your rental account

I have 3 properties with another 2 coming on the horizon so am looking to move away from paying everything from my cc and getting rid of it to help bolster my servicability so wondering if the best approach is to just hand everything over to my property manager to pay from my rental account.

For those that do this do you just have them pay strata, council rates and water rates or also insurance? My feeling is I would be keen to pay insurance myself to be 100% sure it's done given potential risk exposure if payments for it are missed.

Thanks everyone and have an amazing week!

 

Why not borrow?
Tax Tip 4: Borrowing to Pay investment expenses Tax Tip 4: Borrowing to Pay investment expenses

 

I pay mine from the credit card, then transfer money.
Trying to collect some points on my new card.
I would consider getting the property manager to pay it.

 

If you get the PM to pay, make sure there is a firm strategy in place for the time when there is not enough credit in your account to pay the bills. Late fees are no fun.

And remember, paying your bills is your responsibility. Any slip ups will have repercussions for you.
Marg

 

That's mostly why I still do it, I'm responsible for it.
Don't really trust anyone else for that at this stage.

 

I've had property managers paying my expenses for 2 IPs for a year or two now with no troubles. I'm still have mixed feelings about doing this though. It is convenient but I feel a little out of touch with what expenses I am incurring if I don't pay the bills myself. I get the figures in the statements of course but it's not quite the same as paying the money yourself.

 

Well at least you can keep an eye on it with the monthly rental statements.
Does the PM follow up with the tenant for excess water as well?

 

Exactly!
Marg

 

I keep 100% control over all of my IP expenses, none of this goes to the property manager. I use my credit card to take advantage of the interest free days and pay it off in full each month. This keeps more money in my offset account. Come tax time, my spreadsheet and CC statement are easy to match off so I don't miss any deductions.

 

Excess water is a term which disappeared in Sydney Water areas years ago. Tenants pay all water usage if water efficient.

 

Water is the debatable one in all states bar Victoria.

For all the others, pay them yourself if you want to get frequent flyer points on your card or if your tax advisor has suggested you borrow to pay the expenses. Or, have PM pay them if you want a hands off experience to property investing.

With the software we use, the monthly statement automatically has a scanned copy of paid bills and the end of financial year statement correctly categorises everything to align with what your tax accountant would want.

 

atm i have a separate offset account that all rents / bills come in / out off for ips. I would like to use my personal credit card as i'd then be able to collect points. but i'm not sure if this will then become to messy for book keeping / tax time.

 

Thanks all, some really great feedback.

I'm not impartial to keeping payment in house and do feel I would prefer to own the responsibility and process.

I'm currently paying as many bills as I can from my CC to get the interest free days but this also means needing to have a limit higher than I would prefer which may impact borrowing capacity down the track.

Terry's response was great as I wasn't aware borrowing to pay expenses was even possible so may explore this further for the tax advantages, although I can see this having the same impact on borrowing cap as the CC once I start to hit those ceilings!

 

Do you even use the CC for bills where you pay a fee (1.5% etc) for paying via CC? I don't mean for AMEX etc but have noticed some providers will even charge a cc premium for any type of CC. The alternative is usually setting up DD or Manual Transfer, neither of which give you the benefit of interest free days!

 

I found to get around this with most places is to use Aus Post BillPay and pay via PayPal which links to your Amex. No fees no surcharge. Points points points.

 

Great idea and yes I notice most offer postbillpay as an option now!!! Many thanks!

 

re agents not paying, many years ago I suffered a court judgment because the agents didn't pay the rates on one of my properties. Agent's reimbursed me for my costs but I had this on my credit report for 5 years.

 

A few bills like to add credit card surcharges to them. In this situation I pay via EFT as soon as I get the bill, just post date the payment to the day before it's due via internet banking.

 

Yeah, via that option or BPay, whatever it's called.
There is a minority that don't accept payment from a credit card.

 

I pay all IP bills, only ones agency pays is approved repairs/maintenance

This way I manage the cashflow, I know what the statements should be reading like, and no funny business and cut down on excuses.