The profit first method is a great way for real estate investors to prioritize profits. It can help you earn more money with less stress, but it requires some special features that not all banks offer.
We’ve rounded up the best banks for profit first real estate investors, so you can get the most out of your real estate business.
Key takeaways
- The profit first method is a way for real estate investors to put profits first and pay themselves before expenses cut into profits.
- The best banks for profit first offer free checking with multiple accounts, allow you to automatically allocate income to the right accounts, and integrate easily with accounting software.
- Baselane offers a full suite of financial products for real estate investors including a banking platform that’s perfect for profit first. Other great options include Relay, Bluevine, Bank of America and Novo.
What is the profit first method?
The profit first method is a simple cash flow system for real estate investors that, as the name suggests, puts profits first. Rather than deducting expenses from revenue to get profit, investors using the profit first method deduct their profits from revenue and use what’s left to pay for expenses.
Advocates of profit first say it can help increase profits, ensure positive cash flow, and help you stay on top of your spending. Have a look at our article on the profit first method for real estate investors to learn more.
How to choose a profit first bank for your portfolio
Choosing the right bank for profit first investing is a matter of looking for the right features. The best profit first banks offer a mix of features for both profit first businesses and real estate investors, including:
- Multiple accounts: Profit first requires multiple accounts for different categories like profit, taxes and expenses. The best profit first banks allow multiple checking accounts or sub-accounts without additional fees.
- Automatic allocations: The ideal profit first bank will automatically allocate income to the right accounts so you don’t have to think about it.
- No fees: You don’t need your bank cutting into your profits, so choose a profit first bank that doesn’t charge monthly checking fees and keeps transaction fees to a minimum.
- The right integrations: The best banks for profit first will integrate seamlessly with your rental property bookkeeping and other platforms.
- Automated rent collection: The right banking platform should allow you to collect rent automatically without having to chase your tenants for your monthly check.
- FDIC deposit insurance: The best banks protect your hard-earned money with FDIC insurance. Look for a minimum of $3-million in coverage.
What are the best banks for profit first real estate investors?
1. Baselane
Baselane is an all-in-one banking platform built specifically for real estate investors. Its banking product allow you to open multiple account per property helping you keep track of each property’s finances and invest accordingly.
Key features
- Virtual cards and spend controls: Create separate virtual cards for specific OpEx categories, properties, or even vendors. It makes overspending physically impossible—you can set a spending limit on a card and if the transaction exceeds that limit, it will automatically decline—helping you control expenses, which is key to being profitable.
- Auto-categorized bookkeeping: Baselane automatically tags transactions by property and the correct Schedule E category. This eliminates the manual tracking and guesswork and gives you a much clearer picture if your expenses and income.
- High-yield on all deposits: Your funds, including the essential reserves and tenant security deposits (where compliant with state law), earn a competitive annual percentage yield (APY) of upto [v="apyvalue"] APY². This means the money you've already allocated for future use is passively generating more income, directly feeding your "Profit" bucket.
Pros
- Excellent customer service is available over the phone, live chat, or by email.
- Baselane offers a full suite of services for real estate investors including financing, insurance and tenant screening.
- Funds are FDIC insured up to [v="fdic_short"]¹ and protected by Visa Zero Liability Protection.
Cons
- Baselane doesn’t offer a mobile app for its banking product yet, but it’s in the works.
- Support for multiple users is still not available but is expected in the coming months.
2. Relay
Relay calls itself “The official banking platform for Profit First” and it’s evident why. You can open open up to 20 accounts with no hidden fees or minimum balance requirements, allowing you to set up automatic transfers in line with your profit first allocations.
a small business banking platform that allows you to open up to 20 accounts with no monthly fees and. As an added bonus, it even offers access to certified profit first professionals.
Key features
- Automatic transfers: Allocate your revenue from one account to others. Relay allows you to customize your percentages and how frequently money is transferred.
- Competitive APY: Open up to savings accounts and earn earn up to 2.86% APY.
- Profit first professional access: Talk to or take advise from a certified profit first professional who can help you achieve and maintain profitability.
- Integrations: Connect your Relay account with QuickBooks Online or Xero to tidy up your accounts.
Pros
- Easy to use and apply for multiple checking accounts.
- Access to profit first certified professional helping you earn profits as you scale.
- Funds are FDIC insured up to $3-million and protected by Visa Zero Liability Protection.
Cons
- Relay is built primarily for accountants and bookkeepers, not real estate investors. So, it might not offer specific features such as Schedule E auto-categorization.
- Relay customers are limited to 2 savings accounts with lower APY interest than some alternatives.
- Premium features like one-click reconciliation for paid bills in QuickBooks Online, require a paid Relay Pro account.
3. Bluevine
Bluevine is a fully integrated business checking, credit card and lending platform with low fees and lots of features. With Bluevine, you can open a free business checking account and get up to 5 free sub-accounts for your profit first allocations - and set up rules to automatically transfer money to the right sub-accounts at the right time.
Key features
- Automatic transfers: Schedule transfer between main accounts and sub-accounts to makes it easy to stay on top of your profit first allocations.
- Automate accounts payable: Automate payments by integrating Bluevine account with Quickbooks Online.
- International payments: Transfer funds to and from 32 countries quickly. Outgoing payments cost $25, plus 1.5% for non-USD currencies, while incoming wires are a flat $15 fee.
Pros
- Helps you grow passive income through 1.3%–3.5% annual percentage yield (APY) on savings account.
- Funds are FDIC insured up to $3-million.
Cons
- Bluevine’s banking platform is built for small businesses and lacks specific real-estate specific features.
- A cap of five sub-accounts might not be enough for profit first investors.
4. Bank of America
Bank of America is a popular choice for profit first investors due to its existing relationship, wide network, and ample of banking-related features. That said, you can’t open an unlimited number of accounts and there are hefty monthly fees that will eat into your hard-earned profits.
Key features
- Credit options: Being a massive financial institution, Bank of America provides commercial real estate (CRE) loans and other financing solutions. It can help you secure the profitable deal by having financial backup.
- Digital tools: Offers a Cash Flow Monitor and integration with external platforms like QuickBooks®. These integrations can help monitor and track expenses, which is essential for determining the OpEx allocations in Profit First.
- Multiple linked accounts: Offers a Business Advantage Relationship Banking account for no additional monthly fee, provided the high balance requirement is met.
Pros
- Accessible due to multiple banking centers and ATM across major states.
- If you have a personal bank account with Bank of America, you can easily connect it with your business accounts for faster transfers.
Cons
- Limit of two checking accounts with no easy option to open sub-accounts.
- High monthly fee of $16 for business checking accounts with limits on checks written and fees for additional services.
- As with all big banks, customer service can be hit-or-miss.
5. Novo
Novo is an online business banking platform with great features for profit first real estate investors. With Novo, you can get a free business checking account and set up an unlimited number of “reserves” to allocate your income to. Novo’s features may make it better for e-commerce businesses than real estate investors, but you’re still likely to find it has what you need for profit first banking.
Key features
- Built in “reserves”: Automatically allocates a percentage of each deposit to your various profit first accounts.
- No monthly fee: Get unlimited transactions, free ACH transfers and virtual debit cards for no monthly fee.
- Integrations: Novo works with some of the most popular payment and bookkeeping apps including Stripe, Square, Wise and Quickbooks Online.
Pros
- Get free business checking with no monthly fees and unlimited transactions, plus get your ATM fees reimbursed up to $7 per month.
- Collect rent with less hassle using Novo’s free invoice feature.
- Deposits are FDIC insured up to $250,000 and your account is secured by “bank-grade” encryption.
Cons
- Real estate investors may not find all the features they need, like automated rent collection or unit-specific accounts.
- No virtual cards per account, leaving you to allocate your expenses manually.
How to set up a profit first bank account
After you open your checking account, get it ready for the profit first method by creating additional accounts or sub-accounts for a minimum of five categories. Advocates of the profit first method for real estate investors recommend having separate accounts for these categories:
- Profit: When revenue comes in, first allocate your desired amount to profit. Advocates of the profit first system recommend taking at least 5% as profit for the business.
- Owner’s pay: Next, allocate a set amount to pay yourself. Experts suggest paying yourself at least enough to cover your expenses, and ideally more.
- Owner’s tax: After profit and pay are taken care of, set aside enough money to cover corporate and personal income taxes, cover payroll taxes, and pay your property tax bill.
- Operating expenses: Once you’ve set aside money for profit, pay and taxes, the rest can be allocated to your operating expenses. The money in this account covers loan payments, insurance, utilities, and other regular expenses.
- Repairs, vacancy, turnover: As a real estate investor, you may want to allocate some funds for irregular expenses like repairs, vacancies and turnovers.
Pick the right bank to make profit
Each option comes with a bunch of perks to help you make more money, and the best bank for profit first really depends on what features you need and your goals.
If you want to reduce time spent on manual tasks and get a clearer picture of your property's finances, Baselane is the perfect fit. It's a banking platform designed specifically for landlords, packed with tools to get your finances organized, automate those recurring bill payments, and keep your cash flow in check. This means you'll have a better idea of how predictable your income and profit really are.
Ready to stop working so hard for your property and start having your property work for you? Check out Baselane today!
FAQs
What is the Profit First method?
The Profit First method is a cash management system that ensures profitability by following the formula: Sales − Profit = Expenses. Instead of waiting for the end of the month, you proactively allocate a percentage of all incoming revenue to a dedicated profit account first.
How many bank accounts are needed for Profit First?
The Profit First method requires establishing at least five core accounts to create financial "envelopes": Income, Profit, Owner's Compensation, Tax, and Operating Expenses (OpEx). As a landlord, you should also consider separate accounts for maintenance reserves and security deposits, depending on state law.
What features should a Profit First bank have?
The best banks for the Profit First method offer:
- Multiple/unlimited free accounts: To create all the necessary financial buckets.
- Automatic allocations: To easily transfer funds to your Profit, Tax, and OpEx accounts.
- No fees: To prevent monthly maintenance or transaction fees from eating into your profit.
- Integrated expense controls: Like virtual cards with spending limits, to enforce your OpEx budget.
What is "Real Revenue" in Profit First for real estate?
Real Revenue is your true income after deducting "pass-through expenses". For rental properties, this is typically defined as your total rental income minus PITI (Principal, Interest, Taxes, and Insurance). This is the number you should use for calculating your allocation percentages.
Why is Baselane suitable for the Profit First method?
Baselane is ideal for the Profit First method because it is purpose-built for real estate investors and offers the key features needed for seamless implementation:
- Unlimited virtual accounts: Easily create all your required Profit, Tax, OpEx, and Reserve accounts.
- Free banking and high APY: No monthly fees and you earn a competitive APY on all your allocated deposits.
- Expense control: Use virtual debit cards with custom spending limits to ensure you stick to your OpEx budget.
- Automated bookkeeping: Transactions are auto-tagged by property and Schedule E category, giving you the clarity needed to assess and adjust your allocations accurately.
