Do you know the difference between contingency reserves and operating funds?
Operating funds are funds 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 Prince William 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 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 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. 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.
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.
Prince William County Rental Management Resources
Should you understand more about our area?
Nesbitt Realty's Guide to Real Estate is a handy tool for everyone who hopes to review important real estate information about Prince William County and nearby communities. The Guide to Real Estate provides information about what has sold and what is for sale, as well as a couple of compelling facts that you might not be aware of. Not to mention, our Guide features some elements of living in Prince William County. Of course, most of this is useful for buyers and sellers, but property owners and tenants may also find this information to be somewhat enlightening.
a good source for property owners in Prince William County
- Before you lease out your rental property in Prince William County
- Collections and evictions
- Communications with the renter
- During tenancy
- End of lease term and what happens when a renter breaks the lease
- How does the property owner get paid?
- How your management company handles the association and your community
- How your rental manager handles utilities
- How Nesbitt Realty finds renters
- Insurance matters for owners using our property management
- How Nesbitt Realty & Management manage keys
- Prince William County rental investor responsibilities
- Maintenance, repairs & inspections for your property in Prince William County
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your property
- When property owners don't yet know their new address
- Vetting renters in Prince William County