What is a contingency reserve account?

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 Tuckahoe Park, 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 real estate investors.

Contingency reserve is a special type of escrow.

A contingency reserve account is money that is held in savings 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 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.

Landlords 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.

 

Tuckahoe Park Property Management Resources

Basics

Elementary information about what management services in Tuckahoe Park.

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Getting Started

Learn more about getting started with rental property management

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Find A Tenant

Market your property to rent to find a reliable tenant in Tuckahoe Park fast.

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Accounting

How does Nesbitt Realty keep track of income and expenses for property owners?

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Cost

A breakdown of prices of rental management in Tuckahoe Park

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Vetting

How Nesbitt Realty vets tenants for property owners.

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Reserves

What is a contingency reserve account?

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Territory

Where does Nesbitt Realty manage property?

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Clients

Who uses Nesbitt Realty management services?

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Contact

Call (703)765-0300 to speak to a rental specialist now.

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Should you know more about this area?

Our Guide to Real Estate is a helpful resource for everyone who hopes to investigate real estate facts about Tuckahoe Park and neighboring communities.  The Guide to Real Estate provides data about what has sold and what is currently listed, as well as some interesting facts that you may not know.  In addition, our Guide features many of the fundamentals of living in Tuckahoe Park.  As a matter of course, all of this is interesting for buyers and sellers, but rental investors and renters may also find this information to be quite informative.

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Learn more about our rental management services. We service landlords in Virginia.