What is a contingency reserve account?

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

Operating funds are monies that our real estate brokerage 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 Rockingham 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 landlord clients.

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 landlord. 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.

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.

 

Rockingham County Property Management Resources

Basics

Basic information about what property management in Rockingham County.

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Getting Started

Learn more about getting started with property management

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Find A Tenant

List your property to rent to find a reliable tenant in Rockingham County fast.

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Accounting

How does Nesbitt Realty keep track of income and expenses for landlords?

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Cost

A list of prices of rental management services in Rockingham County

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Vetting

How Nesbitt Realty vets renters for landlords.

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Reserves

What is a contingency reserve account?

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Territory

Where does Nesbitt Realty manage rental investments?

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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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Do you need understand more about this community?

Nesbitt Realty's Guide to Real Estate is a helpful resource for everyone who hopes to find out more about Rockingham County and nearby areas.  The Guide to Real Estate compiles data about what has sold and what is on the market, as well as a couple of interesting facts that you may not be aware of.  And, our Guide features some fundamentals of life in Rockingham County.  Naturally, all of this is helpful for buyers and sellers, but landlords and renters will likely also find these resources to be very sobering.

Do you need a rental property manager?

Learn more about our rental management services. We service landlords in Virginia.