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. 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 Harrisonburg, 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 property management. Although the money is in our escrow account, the money belongs to the landlord. 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.
Harrisonburg Property Management Resources
Should you know more about this local real estate market?
Our Guide to Real Estate is a handy resource for everyone who wants to investigate real estate facts about Harrisonburg and surrounding areas. The Guide to Real Estate has facts about what has sold and what is on the market, as well as a couple of compelling facts that you might not be aware of. Also, our Guide features some elements of residing in Harrisonburg. Definitely, all of this is interesting for buyers and sellers, but property owners and tenants will also find these resources to be quite enlightening.
a handy archive for property owners in Harrisonburg
- Before you lease out your investment in Harrisonburg
- Collections and evictions
- Communications with the renter
- During the lease term
- End of lease term and what happens when a renter breaks the lease
- How does the landlord get paid?
- How your property management company handles the association and your community
- How your property management company handles utilities
- How Nesbitt finds renters
- Insurance matters for rental investors using our property management
- How Nesbitt Realty & Management manage keys
- Harrisonburg landlord responsibilities
- Maintenance, repairs & inspections for your rental investment in Harrisonburg
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental
- When landlords don't yet know their new address
- Vetting renters in Harrisonburg