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. 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 Warren 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 real estate investors.
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 property owner. If the property management ends, that money is promptly returned to the landlord.
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.
Warren County Property Management Resources
Should you understand more about the area?
Our Guide to Real Estate is a helpful tool for everyone who hopes to find out more about Warren County and surrounding areas. The Guide to Real Estate has information regarding what has sold and what is for sale, as well as many surprising facts that you might not be aware of. In addition, our Guide has some aspects of residing in Warren County. Of course, all of this is interesting for purchasers and sellers, but rental investors and tenants will also find this information to be quite enlightening.
a useful source for landlords in Warren County
- Before you move a tenant into your rental in Warren County
- Collections and evictions
- Communications with the renter
- During tenancy
- End of lease term and what happens when a tenant breaks the lease
- How does the property owner get paid?
- How your rental manager handles the association and your community
- How your property manager handles utilities
- How Nesbitt Realty finds tenants
- Insurance matters for owners using our property management
- How Nesbitt Realty & Management manage keys
- Warren County owner responsibilities
- Maintenance, repairs & inspections for your rental property in Warren County
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental investment
- When property owners don't yet know their new address
- Vetting tenants in Warren County