What is a contingency reserve account?

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

Operating funds are monies 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 Falls Church, 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 real estate investor. 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.

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.

 

Falls Church Property Management Resources

Basics

Fundamental information about what property management in Falls Church.

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Getting Started

Learn more about getting started with rental property management

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Find A Tenant

List your property to rent to find a dependable renter in Falls Church 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 in Falls Church

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Vetting

How Nesbitt Realty vets renters for property owners.

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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 our local real estate market?

Nesbitt Realty's Guide to Real Estate is a helpful tool for everyone who wants to find out more about Falls Church and neighboring communities.  The Guide to Real Estate compiles information about what has sold and what is on the market, as well as a couple of compelling facts that you might not know.  Not to mention, our Guide has quite a few of the elements of life in Falls Church.  As might be expected, all of this is interesting for purchasers and sellers, but rental investors and tenants will likely also find these tools to be quite enlightening.