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 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 Shenandoah 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 repairs and other incidentals that occur during property 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 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.

 

Shenandoah County Rental Management Resources

Basics

Elementary info regarding property management in Shenandoah 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 reliable renter in Shenandoah County fast.

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Accounting

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

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Cost

A breakdown of fees associated with rental management services in Shenandoah County

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Vetting

How Nesbitt Realty vets tenants for property owners.

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Reserves

What is a contingency reserve account?

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Territory

Where does Nesbitt Realty manage 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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Do you need understand more about the area?

Nesbitt Realty's Guide to Real Estate is a free tool for everyone who hopes to find out more about Shenandoah County and surrounding areas.  The Guide to Real Estate includes information regarding what has sold and what is on the market, as well as a couple of interesting facts that you may not know.  In addition, our Guide has some benefits of living in Shenandoah County.  Of course, all of this is helpful for purchasers and sellers, but property owners and tenants will likely also find these resources to be somewhat eye-opening.