Do you know the difference between contingency reserves and operating funds?
Operating funds are funds 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 Frederick County, 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 escrow 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 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.
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.
Frederick County Property Management Resources
Should you know more about the local real estate market?
Nesbitt Realty's Guide to Real Estate is a handy resource for anyone who needs to review important real estate information about Frederick County and nearby areas. The Guide to Real Estate has data regarding what has sold and what is on the market, and a few shocking facts that you may not be aware of. In addition, our Guide has quite a few of the benefits of life in Frederick County. Of course, most of this is interesting for buyers and sellers, but property owners and tenants might also find the facts to be very edifying.
a free archive for property owners in Frederick County
- Before you move a tenant into your rental in Frederick County
- Collections and evictions
- Communications with the tenant
- During the lease term
- End of lease term and what happens when a tenant breaks the lease
- How does the landlord get paid?
- How your property management company handles the association and your community
- How your managment company handles utilities
- How Nesbitt Realty finds tenants
- Insurance matters for rental investors using our property management
- How Nesbitt Realty & Management manage keys
- Frederick County landlord responsibilities
- Maintenance, repairs & inspections for your rental investment in Frederick County
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental investment
- When property owners don't yet know their new address
- Vetting tenants in Frederick County