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 fund our business. Operating funds are our money.  Conversely, 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 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 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.

Property owners 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 Property Management Resources

Basics

Elementary information about what management services 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

List your property to rent to find a great renter in Shenandoah County fast.

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Accounting

How does Nesbitt Realty keep track of income and expenses for real estate investors?

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Cost

An overview of fees associated with rental management services in Shenandoah County

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Vetting

How Nesbitt Realty checks the backgrounds of tenants for landlords.

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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 want know more about our community?

Nesbitt Realty's Guide to Real Estate is a handy tool for everyone who wants to review important real estate information about Shenandoah County and surrounding areas.  The Guide to Real Estate compiles data about what has sold and what is on the market, as well as a few compelling facts that you may not know.  In addition, our Guide spotlights some fundamentals of living in Shenandoah County.  Of course, all of this is useful for buyers and sellers, but property owners and tenants might also find these tools to be quite eye-opening.

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