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. Above all, 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 Castleton, 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 repairs 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.
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.
Castleton Rental Management Resources
Do you need understand more about this local real estate market?
Nesbitt Realty's Guide to Real Estate is a helpful resource for everyone who wants to find out more about Castleton and neighboring communities. The Guide to Real Estate has facts regarding what has sold and what is on the market, as well as a couple of interesting facts that you might not be aware of. And, our Guide features some fundamentals of residing in Castleton. As might be expected, most of this is useful for buyers and sellers, but landlords and tenants should also find the facts to be somewhat useful.
a handy reference for landlords in Castleton
- Before you put a renter in your investment in Castleton
- Collections and evictions
- Communications with the tenant
- During tenancy
- End of lease term and what happens when a tenant breaks the lease
- How does the rental investor get paid?
- How your property manager handles the association and your community
- How your management company handles utilities
- How Nesbitt Realty & Management finds renters
- Insurance matters for owners using our property management
- How Nesbitt Realty & Management manage keys
- Castleton rental investor responsibilities
- Maintenance, repairs & inspections for your rental property in Castleton
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental investment
- When owners don't yet know their new address
- Vetting tenants in Castleton