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 Luray, 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 property owners.
Contingency reserve is a special type of escrow.
A contingency reserve account is money that is held in savings to pay for repairs and other incidentals that occur during rental 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.
Luray Rental Management Resources
Should you know more about our area?
Nesbitt Realty's Guide to Real Estate is a free tool for anyone who wants to learn more about Luray and nearby communities. The Guide to Real Estate compiles data regarding what has sold and what is currently listed, as well as many compelling facts that you might not be aware of. And, our Guide has some benefits of living in Luray. Of course, most of this is helpful for purchasers and sellers, but owners and tenants may also find these tools to be somewhat informative.
a useful reference for rental investors in Luray
- Before you put a renter in your rental in Luray
- Collections and evictions
- Communications with the tenant
- During the lease term
- End of lease term and what happens when a tenant breaks the lease
- How does the rental investor get paid?
- How your management company handles the association and your community
- How your rental manager handles utilities
- How Nesbitt finds tenants
- Insurance matters for landlords using our property management
- How Nesbitt Realty & Management manage keys
- Luray rental investor responsibilities
- Maintenance, repairs & inspections for your rental investment in Luray
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your property
- When owners don't yet know their new address
- Vetting tenants in Luray