Do you know the difference between contingency reserves and operating funds?
Operating funds are monies that our real estate brokerage uses to fund our business. Operating funds are our money. On the other hand, 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 Port Royal, 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 purchasers (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 repairs and other incidentals that occur during rental management. Although the money is in our escrow account, the money belongs to the real estate investor. If the property management ends, that money is promptly returned to the landlord.
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.
Property owners 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.
Port Royal Property Management Resources
Do you want know more about our local real estate market?
Our Guide to Real Estate is a free tool for everyone who hopes to find out more about Port Royal and nearby areas. The Guide to Real Estate compiles facts about what has sold and what is currently listed, as well as a couple of surprising facts that you may not know. Furthermore, our Guide highlights many of the fundamentals of residing in Port Royal. Of course, most of this is helpful for purchasers and sellers, but rental investors and tenants should also find this data to be very sobering.
a free source for property owners in Port Royal
- Before you rent out your investment in Port Royal
- Collections and evictions
- Communications with the renter
- During tenancy
- End of tenancy and what happens when a renter breaks the lease
- How does the property owner get paid?
- How your property manager handles the association and your community
- How your property management company handles utilities
- How Nesbitt Realty finds renters
- Insurance matters for property owners using our property management
- How Nesbitt Realty & Management manage keys
- Port Royal rental investor responsibilities
- Maintenance, repairs & inspections for your property in Port Royal
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental investment
- When property owners don't yet know their new address
- Vetting tenants in Port Royal