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.  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 Mount Vernon, 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 property owners.

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 property management. Although the money is in our escrow account, the money belongs to the property owner. If the property management ends, that money is promptly returned to the property owner.

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.

 

Mount Vernon Rental Management Resources

Basics

Basic information regarding rental managment in Mount Vernon.

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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 dependable renter in Mount Vernon fast.

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Accounting

How does Nesbitt Realty keep track of income and expenses for real estate investors?

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Cost

An overview of prices of rental management services in Mount Vernon

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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 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 property management specialist now.

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Do you want understand more about our community?

Nesbitt Realty's Guide to Real Estate is a free tool for everyone who needs to investigate real estate facts about Mount Vernon and neighboring communities.  The Guide to Real Estate has data regarding what has sold and what is on the market, and a few shocking facts that you might not know.  And, our Guide spotlights many of the elements of residing in Mount Vernon.  Definitely, all of this is helpful for purchasers and sellers, but owners and tenants may also find this information to be somewhat useful.