What is a contingency reserve account?

Do you know the difference between contingency reserves and operating funds?

Operating funds are funds that our property management and real estate business uses to fund our business. Operating funds are our money.  In contrast, 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 Dunn Loring, 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 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 repairs and other incidentals that occur during rental 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.

 

Dunn Loring Rental Management Resources

Basics

Elementary information about what management services in Dunn Loring.

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Getting Started

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Find A Tenant

List your property to rent to find a dependable tenant in Dunn Loring fast.

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Accounting

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

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Cost

An overview of prices of rental management services in Dunn Loring

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Vetting

How Nesbitt Realty vets renters for our clients.

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Reserves

What is a contingency reserve account?

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Territory

Where does Nesbitt Realty manage rental investments?

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Clients

Who uses Nesbitt Realty management services?

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Contact

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

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Should you understand more about the local real estate market?

Our Guide to Real Estate is a free tool for everyone who needs to find out more about Dunn Loring and surrounding communities.  The Guide to Real Estate compiles information about what has sold and what is currently listed, and a few surprising facts that you may not know.  Furthermore, our Guide spotlights many of the fundamentals of living in Dunn Loring.  Definitely, most of this is useful for purchasers and sellers, but rental investors and tenants may also find these tools to be somewhat eye-opening.

Nesbitt Realty provides award-winning property management services.

Learn more about how we can help you achieve your real estate goals.