Do you know the difference between contingency reserves and operating funds?
Operating funds are funds that our real estate brokerage uses to pay for our business. Operating funds are our money. But, 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 Clear Brook, 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 savings to pay for maintenance 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.
Landlords 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.
Clear Brook Property Management Resources
Should you understand more about our local real estate market?
Nesbitt Realty's Guide to Real Estate is a handy resource for everyone who needs to find out more about Clear Brook and nearby areas. The Guide to Real Estate compiles information about what has sold and what is currently listed, and a couple of interesting facts that you might not know. Also, our Guide features quite a few of the aspects of life in Clear Brook. Of course, most of this is interesting for purchasers and sellers, but rental investors and renters may also find these tools to be very eye-opening.
a handy archive for rental investors in Clear Brook
- Before you put a renter in your investment in Clear Brook
- 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 landlord 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 landlords using our property management
- How Nesbitt Realty & Management manage keys
- Clear Brook owner responsibilities
- Maintenance, repairs & inspections for your rental investment in Clear Brook
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your property
- When property owners don't yet know their new address
- Vetting renters in Clear Brook