Do you know the difference between contingency reserves and operating funds?
Operating funds are monies that our property management and real estate business uses to pay for our business. Operating funds are our money. Still, escrow funds are different. Escrow funds are monies that Nesbitt Realty is holding on behalf of tenants, landlords, buyers and sellers. Escrow funds are not our money, but they are monies that we are trusted to safeguard. At any given time, Nesbitt Realty has hundreds of thousands of dollars in escrow accounts.
In Alexandria, the Commonwealth of Virginia requires that all real estate licensees manage escrow funds in a particular manner. Most importantly the Commonwealth requires that escrow funds are properly accounted for at all times. In additional all escrow funds must be kept separate from operating funds. The biggest portion of our escrow funds are tenant security deposits, but also hold deposits for buyers (and sometimes sellers) as we'll as contingency reserve funds for landlord clients.
Contingency reserve is a special type of escrow.
A contingency reserve account is money that is held in escrow to pay for maintenance and other incidentals that occur during property management. Although the money is in our escrow account, the money belongs to the landlord. When the property management ends, that money is promptly returned to the real estate investor.
When a repair bill arises we use money in the contingency reserve account to pay that bill. When bills are paid in this manner the account is depleted. When the account is missing funds, at the end of the month when new rents are paid, Nesbitt Realty replenishes the count with money withheld from this rent. As property managers, Nesbitt Realty prepares a statement each month to show if/when money is depleted and how/when money is replenished into the contingency reserve account.
Real estate investors do not pay us money to set up the contingency reserve account. Instead, Nesbitt Realty withholds money from the first month of rent in order to set up the account.
Alexandria Property Management Resources
Should you understand more about our local real estate market?
Nesbitt Realty's Guide to Real Estate is a free tool for anyone who wants to learn more about Alexandria and neighboring areas. The Guide to Real Estate compiles data regarding what has sold and what is for sale, as well as a couple of surprising facts that you may not be aware of. And, our Guide highlights many of the benefits of life in Alexandria. Of course, most of this is useful for buyers and sellers, but rental investors and renters may also find these tools to be somewhat eye-opening.
a useful archive for landlords in Alexandria
- Before you rent out your property in Alexandria
- Collections and evictions
- Communications with the renter
- During tenancy
- End of tenancy and what happens when a tenant breaks the lease
- How does the rental investor get paid?
- How your property management company handles the association and your community
- How your property manager handles utilities
- How Nesbitt finds renters
- Insurance matters for landlords using our property management
- How Nesbitt Realty & Management manage keys
- Alexandria landlord responsibilities
- Maintenance, repairs & inspections for your rental property in Alexandria
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental
- When property owners don't yet know their new address
- Vetting tenants in Alexandria