How to Make 3% More Rent Automatically (Takes 5 Minutes) (Rookie Reply)

0:00One of the best parts of this show is that we get to answer real questions from rookies who are in the trenches right now. Yeah, and today's questions are all over the map. From where to stash your rental income so it's actually earning you something, to how to find deals in a tough market like Chicago, to running numbers on a$700 ,000 short-term rental. And the cool part is these are the same kinds of challenges that rookies everywhere are facing. Cash management, deal flow, and running STR numbers the right way. So if you've ever wondered how to maximize your rent deposits, how to break into a competitive city, or what you might be missing when analyzing an Airbnb, This episode is for you.

0:42This is the Real Estate Rookie Podcast, and I'm Ashley Kerr. And I'm Tony J. Robinson. And with that, let's jump into our first question, which comes from Kevin in the BiggerPockets forums. Kevin says, where do landlords keep rental income to earn interest before expenses? I'm looking for smart ways to maximize interest on rental income before mortgage and expense payouts. What accounts or platforms do you use? Right now, I keep my rental income in a standard checking account that doesn't earn interest. On average, I bring in about$8K per month in rent and spend around$6.5K on mortgage and expenses.

1:15That leaves me with roughly$1 ,500 sitting idle each month, not earning anything. I'd love to hear how other landlords manage this. Are you using high-yield savings accounts, money market accounts, or landlord-specific platforms to make your cash work harder between rent collection and payouts? This is actually the cool question. I mean, we're on episode like, I don't know, 600 and some odd, right? And I don't know if anyone's ever asked this question of like, where do we put our cash to make it work harder? I guess just quick context, right? When you have money sitting in a bank, if it's in a traditional account, it's earning usually pennies, right?

1:50If that. 0.001%. 0.001%, right? And when you think about inflation, it truly means that your money is losing value every single year that it sits there idle. So oftentimes, if you have cash that you know is just going to be sitting there, it makes more sense to put that into some sort of account that earns more interest, right? The bank is going to pay you more for leaving that money in that account. So it's a really great question. Ash, you're obviously our resident personal finance queen. So what is your initial recommendation to Kevin on where he should stash these funds? Yeah, I definitely started out with one of those 0.001 % interest checking accounts, business checking accounts for my local bank.

2:32And we love local banks here, but most of the time it's for the financing piece and not actually the cash management. So I actually made the switch to Baselain, which is actually a banking platform built for real estate investors. And this is where my tenants automatically pay their rent and it goes into that account. They also have an automated bookkeeping service called Baselane Smart. And that actually automatically puts my transactions in. So it makes my accounting and bookkeeping a lot easier. But yeah, I like, and also they have the high yield savings accounts also. So not only do I like to find a bank account that, you know, is earning me some money from that high yield interest savings account, but also that makes it easier as a business owner to actually track my income and expenses.

3:30There's one bank that I had started with, a very small local bank that had like five branches. And there was no kind of automation. It was literally, I got my bank statement in the mail every month. I couldn't even go online to an online portal and like view a check. You know how you can just go and sign into your online banking and view a check as to who was written to and see the actual copy. It was a very long time before they actually got anything like that in place. So I definitely don't recommend a small local bank for your business. I really definitely like, you know, a banking platform instead.

4:13That's all encompassing. Baselane is a great option. We know a lot of folks are using Baselane. I personally use Relay Financial for all of our business banking. You guys, if you follow me on Instagram, I'm at Tony J. Robinson. You probably heard me talk about Relay before. If you're on our YouTube channel, like mine and my wife's YouTube channel, The Real Estate Robinson. We talk about it a lot there. And the reason that we kind of stumbled into Relay, I'll talk about the savings part, but the reason that we stumbled into Relay initially is because I'm a big fan of the Profit First methodology for managing your cash flow.

4:41And we've actually interviewed Mike McAllow, the author of Profit First on the podcast here, so you can look that episode up. But Relay is actually the only bank that I know of that is the bank built for managing profit first or for implementing profit first. And you can have all of your different checking accounts set up and the money moves automatically. They've since added a lot of other functionality, which makes it really great. But in addition to all those cool things about being like an online first bank and the cool technology, they also offer pretty strong interest earned on savings accounts.

5:14Now, obviously, these, and no matter what bank you're going with, these, the interest that you'll earn will vary and fluctuate, usually based on the Fed funds rate. So we just had that rate come down recently. And because of that, a lot of these banks that offer interest on their savings accounts have probably pulled their rates down. I looked at Baseland. They're at just over 3%. Relay right now is just under 3 % of the most that you can earn. But that's 3 % is still better than 0.001 % than what you'd be getting. So I think for me, just sticking into an account like that that's still liquid, I wouldn't put into something like even a money market account.

5:50I think I would be somewhat nervous for because there's too much fluctuation on a day to day. And I want to make sure that I can access those funds when I need it. You know, a CD account, right, that's locked up for too long. So just some of these savings accounts where you can earn a healthy return, I think, is the best option. But sometimes even some of the money market account or the CDs, the rate is not even that much better than a high yield savings account. I remember looking, this was probably four years ago, five years ago. I had a chunk of money that I was looking to do something with and to put it into something.

6:26And it was actually better for me to put it in the high yield savings account than lock it up for six months, a year into a CD. and um yeah so i think look around but also like especially if you're it's what is the the purpose of that money so like basically and i keep all my security deposits in there where i i'm not using that money that money is sitting there but also if someone moves out i have to be ready to be able to take that money out to to refund their security deposit as long as you know there's no damage or thing. But if it's your rental income, do you need to pay bills conveniently?

7:05Do you want to have to write a check every month? Do you want some kind of bill pay system, things like that you should be thinking of? Do you want your rent collection to actually be deposited into that account? Or is this just like your leftover cash flow that's actually just going to be sitting there and maybe you're saving for a CapEx or saving for the next deal, things like that. So I also think you should be looking at what kind of bank account you want, depending on what that money is actually going to be used for, or maybe all of those things you need. Ashton, you bring up a really good point about comparing the rates on a certificate of deposit, which typically you have to lock that money up for some predetermined period of time, and the traditional high-yield savings accounts.

7:49And we use Ally for our personal bank. And they've got, I think, 3 % on their savings accounts right now, just over 3%. So pretty much in line with what both Relay and Baselain are offering. but their high, their savings account offers a 3.4 % rate. Their three month CD offers a flat 3%. So you would truly be better off in that timeframe, just leaving your money in a, um, in a, in a savings account. And even at 12 months is at 3.85%. It doesn't even get above four ever. the highest that they'll offer is the 3.65 % and that's on 18 months, or it looks like 3.85 % on 12 months. But my point is we're talking, you know, 85 basis points.

8:39But that money is locked up for 12 months. So is it worth it? Probably not for, for this, for this scenario. I think the only time, Ash, and I'm curious what you think, like I think the only time a CD would make sense is if you're, you're really trying to force yourself to save money. Yeah. So you don't access it. So you don't access it at all. Maybe you got a big tax refund or maybe you came into some money, you sold something, and you want to make sure I really don't want to spend this money and you don't trust yourself to kind of be disciplined without that. Then I think the CD is a great approach because it forces you to forget that that money exists while also earning interest on it.

9:14But for day-to-day operational things in the portfolio, I don't think it makes a ton of sense. But I also wouldn't do that if you like are doing a risky project or rehab where maybe all of a sudden you might be going out of budget. Just because you don't want to go over budget and you don't want to use that money, like I'd make sure you still have access to your reserves. But this is additional cash, additional savings. And you don't want to want to touch that, like maybe saving for a down payment or something like that. You could put that in knowing it's going to be a year out or whatever till you're ready to purchase that property.

9:45But I just looked for my personal savings. I don't use Ally, but I use Wealthfront. And that actually is at 3.75%. Yeah. And if you refer someone, they'll give you a half a point boost for three months. And you'll get it too. So, Tony, you need me to refer you? Anybody, DM me at Wealthfront Rentals. I will give this to you as you get that point boost and I could get that half a point boost too. You mentioned that, right? So we also use – yeah, I've got a really complicated banking setup. So we use Ally for like most of our bill pays and all those things. But like our discretionary spending, we always have like a different account.

10:30And right now we're using this new bank that I found called Crew. And Crew kind of operates with like the digital envelope system. I actually used to use this other company called Q, but they're going through this weird restructuring things. We had to pull all of our money out. But part of the reason that I like Crew was because they offer a base APY interest rate of 3.45 % for any money you have in there. But then if you refer someone, you get, again, a half percent boost for up to three months. And you can have up to four boosts active at one time. So that could be, right, that's like an additional 2 % if you were able to refer that many people in such a short time frame.

11:09Okay, so four of you messaged Tony and then one other person messaged me. One thing too that I've seen a lot of like personal finance people that I follow on Instagram do is they change their checking account often for cash bonuses. So they'll look for like, you know, and a lot of like nationwide banks like Chase, Wells Fargo, I'll see them do this where it's like if you have X amount of like ACH payments, so like your paycheck being automatically deposited. And like if you have six of them over three months or something like that, they'll deposit like I've seen them up as like nine hundred dollars they'll deposit into your account by just fulfilling certain requirements or whatever.

12:00And there are people that I will see that will frequently change their banking based on it. Now, it makes me like exhausted thinking about changing all of my auto pays. But if you could do it where you're just having your check deposited and then, you know, money transferred to another account maybe and you don't have to change all of those. But to get$900 over three months, it might be worth it to take the time to actually change, you know, your bank every three months or whatever the time period is to actually get that. I mean, you could potentially get a couple thousand dollars a year just from doing that.

12:37Yeah. Okay. Well, we have to take a short break, but we will be right back with our next question after this. Most investors spend all their time talking about their high level returns, But that's not the number that actually matters. What actually matters is what you keep after taxes. And that's where multifamily real estate quietly stands out. With built-in advantages like depreciation, the right deals can generate steady cash flow while reducing the tax drag. BAM Capital structures its multifamily investments around those fundamentals, pairing tax efficiency with disciplined operators and a long-term approach.

13:12This isn't about chasing hype or guessing market timing. It's about building durable, tax-aware wealth over time. Learn more at biggerpockets.com slash BAM. Do you ever notice how every passive investment somehow turns into a very active lifestyle? Active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10 % below market value, in the best markets across the country, without making real estate your second job? That's exactly what Rent to Retirement does. They're a full-service, turnkey investment company handling everything for you.

13:46In some cases, investors get 50 to 75 % of their down payment back at closing, plus interest rates as low as 3.75%. They've partnered with BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more. Do you ever notice how every passive investment somehow turns into a very active lifestyle? Active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10 % below market value, in the best markets across the country, without making real estate your second job?

14:21That's exactly what Rent to Retirement does. They're a full-service, turnkey investment company, handling everything for you. In some cases, investors get 50 % to 75 % of their down payment back at closing, plus interest rates as low as 3.75%. They've partnered with BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more. Mess up your bookkeeping and you mess up your profits. That's why real estate investors need accounting they can trust. TurboTenant Accounting is built for landlords, automatically helping you maximize deductions, keep clean books, and reduce tax season headaches.

15:01TurboTenant Accounting lives right where you already manage your rentals. One login, one platform, everything in sync. Say goodbye to manual spreadsheets or expensive software that's not built for real estate. Don't gamble with your numbers. Run your rentals like a real business at turbotenant.com slash get accounting. The second question comes from Eric. He says, I'm currently looking for my next deal in Chicago and my search has been all MLS deals. I'm searching for a two to four unit, but I haven't found anything that works for me. By the way, I'm talking about C-ish class and above class, no D class.

15:37I tend to be cautious and conservative with my deal analysis, but am I the only one finding it a bit difficult in Chicago? If someone could point me in the right direction, let me know. Overall, I think deal finding in general across the country has been hard given the current market conditions. Tony, do you know anything about the Chicago market specifically? I mean, I personally haven't looked in Chicago, but to your point, Ashley, I think that what Eric is describing is something that we're seeing nationwide. But I think the questions that I would pose back to him are the questions I would pose back to anyone, no matter what market you're in.

16:20First, he says, I haven't found anything that works for me. And I think that is like the piece that we really need to drill down on. How are you defining, quote unquote, quote, works for me, right? Are we saying that from a, there just aren't enough two to four units that are on the market, right? So there's just simply not enough volume of deals for you to look at. Is it an issue of, Hey, I'm, I'm, I'm, I've only analyzed three properties because I'm just looking at the MLS and I'm just naturally excluding a lot of these because I think they're not going to work. So it's the volume of deals analyzed or underwritten.

16:58Are you maybe analyzing a lot of deals, but none of them are penciling at the listed offer prices, and then you're stopping there? Or are you going to the next step in submitting offers at whatever price makes the most sense for you? Or are you submitting all those offers and then everyone's just saying no, right? So there's like so many different layers that we can focus on. But I think what I see most rookies struggle with, Ashley, and I'm sure you see the same, is they never get to the point of getting a bunch of rejections, right? Like they usually get stuck at some point before that, where either A, their buy box is so tight that they just can't analyze enough deals.

17:36B, they're not analyzing enough deals. Or C, they've analyzed those deals, but they're not actually making the offers. And if we can just focus on pulling those three levers, I think typically we start to see more good things happen. So that's my take. And again, I'm making some assumptions here, but I feel one of those is probably the issue that Eric is facing. The first thing that I thought of actually was earlier today, we interviewed a rookie investor, Esther, and she talked about how there was this property that sat on market, sat on market, and they kept decreasing the price. And they ended up buying it.

18:12And the reason they bought it not was because the price kept on decreasing and because it all of a sudden was affordable. It was because it had 900 extra square feet that wasn't in the listing. So I think this is another lesson for all of us is that just because a deal isn't working for you, what are you going based off of and how can you get more creative? I think it was like 900 square feet and it was just a rec room. And they DIYed YouTube University, turns it into a studio apartment to rent out. Or I don't know if it was a studio apartment, but an apartment to rent out so they could house hack.

18:50And I think that getting creative and looking outside of the box as to what else can you do with a property? What other additional income streams? What is available in this property that's not in the listing? So like scan the photos. Does it look like maybe this property is actually bigger than they're stating? Are there, like I'm renting a property right now that it's two bedrooms and one bath, but it has two large living rooms. So I'm making that abundantly clear that like if you wanted to, you could use another living room as an office, a den, another bedroom if you wanted to put a curtain up, I guess.

19:33I don't know. But like there's more possibilities just because it's a two bed, one bath doesn't mean there's extra space to do something with. And yeah, probably eventually we'll turn one of those living rooms into a third bedroom to really maximize the value. But it's going to rent out great now as is. So I think just looking outside the box and what other opportunities, what additional income streams can you get out of a property that's maybe not just stated there right in front of you on the listing. All right, we're going to take a quick break before our last question, but while we're gone, be sure to subscribe to the Real Estate Rookie YouTube channel.

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23:38Sign up for free at avail.co slash biggerpockets. That's A-V-A-I-L dot C-O slash biggerpockets. All right, guys, welcome back. We're here with our final question for today. And this question, also from the BiggerPockets forums, comes from Chris. And Chris says, should I buy the short-term rental? The purchase price is$700 ,000. The down payment would be$300 ,000. The monthly payment, including taxes and insurance, would be$2 ,225. dollars. The Rabu, and Rabu is like a data estimator, estimates the monthly revenue at $6 ,800 per month. He plans to self-manage. And he says, when I estimate supplies in CapEx, I see a monthly net of about$3 ,800.

24:25I'm an experienced property manager, but newbie investor. So I appreciate any advice. What am I missing? A couple of things here. Get out your handy dandy calculator. What is our cash on cash return with a$300 ,000 down payment? Yeah. And that was one of the things that jumped out at me, right? I mean, that's obviously a big down payment, right? That's 300 over 700, like 40%, 42%. So it's a massive down payment. And if you're netting$3 ,800 a month over 12 months, it's about$45 ,000 a year, but over a$300 ,000 down payment. We're looking at about a 15 % cash on cash return, which honestly isn't bad.

25:01It's a strong return given the amount of down payment that you're putting. But I have a few very serious questions, I think, to make sure that this is actually a deal worth pursuing. The first thing is the monthly revenue estimate. Chris says that Rabu estimates$6 ,800 per month in income. That is a great starting point to know if this deal is worth doing a deeper dive on. but I would not make a purchase decision on any short-term rental property based on a revenue estimate from Rabu, from AirDNA, or from any other data provider because they are not accurate. Tony, I have a question about that.