Do you know the difference between contingency reserves and operating funds?
Operating funds are monies that our real estate brokerage uses to pay for our business. Operating funds are our money. Still, 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 Manassas Park, 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 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.
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.
Manassas Park Property Management Resources
Do you need understand more about this area?
Our Guide to Real Estate is a helpful tool for everyone who needs to learn more about Manassas Park and surrounding communities. The Guide to Real Estate includes information regarding what has sold and what is on the market, as well as a couple of compelling facts that you might not know. Also, our Guide spotlights some assets of life in Manassas Park. As might be expected, all of this is useful for purchasers and sellers, but landlords and renters should also find this information to be very enlightening.
a good reference for rental investors in Manassas Park
- Before you lease out your property in Manassas Park
- Collections and evictions
- Communications with the renter
- During the lease term
- End of tenancy and what happens when a tenant breaks the lease
- How does the landlord get paid?
- How your managment company handles the association and your community
- How your rental manager handles utilities
- How Nesbitt Realty finds renters
- Insurance matters for landlords using our property management
- How Nesbitt Realty & Management manage keys
- Manassas Park owner responsibilities
- Maintenance, repairs & inspections for your property in Manassas Park
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental property
- When owners don't yet know their new address
- Vetting tenants in Manassas Park