Do you know the difference between contingency reserves and operating funds?
Operating funds are monies that our real estate brokerage uses to pay for our business. Operating funds are our money. However, 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 Somerset, 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 property owners.
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 property owner. 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.
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.
Somerset Property Management Resources
Basics
Elementary info regarding property management in Somerset.
Getting Started
Learn more about getting started with rental property management
Find A Tenant
List your property to rent to find a dependable tenant in Somerset fast.
Accounting
How does Nesbitt Realty keep track of income and expenses for property owners?
Cost
A breakdown of fees associated with property management services in Somerset
Vetting
How Nesbitt Realty vets tenants for landlords.
Reserves
What is a contingency reserve account?
Territory
Where does Nesbitt Realty manage rental property?
Clients
Who uses Nesbitt Realty management services?
Should you understand more about the community?
Our Guide to Real Estate is a helpful tool for anyone who needs to investigate real estate facts about Somerset and surrounding communities. The Guide to Real Estate provides data about what has sold and what is for sale, and many interesting facts that you may not know. And, our Guide has quite a few of the benefits of living in Somerset. As a matter of course, all of this is useful for purchasers and sellers, but rental investors and tenants might also find the facts to be very informative.
Landlord Reference
a useful reference for rental investors in Somerset
- Before you put a renter in your investment in Somerset
- Collections and evictions
- Communications with the renter
- During tenancy
- End of lease term and what happens when a renter breaks the lease
- How does the property owner get paid?
- How your management company handles the association and your community
- How your property manager handles utilities
- How Nesbitt finds renters
- Insurance matters for rental investors using our property management
- How Nesbitt Realty & Management manage keys
- Somerset owner responsibilities
- Maintenance, repairs & inspections for your rental property in Somerset
- 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 Somerset