Do you know the difference between contingency reserves and operating funds?
Operating funds are monies that our real estate brokerage uses to fund 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 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 purchasers (and sometimes sellers) as we'll as contingency reserve funds for real estate investors.
Contingency reserve is a special type of escrow.
A contingency reserve account is money that is held in escrow 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.
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.
Harrisonburg Property Management Resources
Do you want understand more about our area?
Our Guide to Real Estate is a helpful resource for everyone who wants to review important real estate information about Harrisonburg and surrounding communities. The Guide to Real Estate has data regarding what has sold and what is currently listed, and many compelling facts that you might not know. Also, our Guide highlights many of the elements of life in Harrisonburg. As might be expected, most of this is helpful for buyers and sellers, but property owners and renters will probably also find the facts to be very enlightening.
a handy reference for landlords in Harrisonburg
- Before you move a tenant into your rental property 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 management company handles the association and your community
- How your rental manager handles utilities
- How Nesbitt finds renters
- Insurance matters for landlords using our rental management
- How Nesbitt Realty & Management manage keys
- Harrisonburg landlord responsibilities
- Maintenance, repairs & inspections for your property in Harrisonburg
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental property
- When landlords don't yet know their new address
- Vetting renters in Harrisonburg