What is a contingency reserve account?

Do you know the difference between contingency reserves and operating funds?

Operating funds are monies that our property management and real estate business 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 Page 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 real estate investors.

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 property owner. 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.

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.

 

Page County Property Management Resources

Basics

Fundamental information about what rental managment in Page County.

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Getting Started

Learn more about getting started with rental property management

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Find A Tenant

Market your property to rent to find a great tenant in Page County fast.

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Accounting

How does Nesbitt Realty keep track of income and expenses for real estate investors?

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Cost

An overview of prices of property management services in Page County

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Vetting

How Nesbitt Realty vets renters for our clients.

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Reserves

What is a contingency reserve account?

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Territory

Where does Nesbitt Realty manage rental property?

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Clients

Who uses Nesbitt Realty management services?

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Contact

Call (703)765-0300 to speak to a property manager now.

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Should you understand more about the local real estate market?

Our Guide to Real Estate is a helpful resource for anyone who needs to investigate real estate facts about Page County and nearby areas.  The Guide to Real Estate compiles information about what has sold and what is currently listed, and some shocking facts that you might not know.  In addition, our Guide spotlights some benefits of living in Page County.  Of course, all of this is helpful for buyers and sellers, but landlords and renters will probably also find these tools to be somewhat enlightening.

Do you need advice about rental property management?

Talk to one of our experts about rental property in Virginia.