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 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 Riverton, 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 purchasers (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 rental management. Although the money is in our escrow account, the money belongs to the real estate investor. When 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.

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.

 

Riverton Rental Management Resources

Basics

Elementary info regarding rental managment in Riverton.

Learn More

Getting Started

Learn more about getting started with rental property management

Learn More

Find A Tenant

Market your property to rent to find a dependable tenant in Riverton fast.

Learn More

Accounting

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

Learn More

Cost

A list of fees associated with property management services in Riverton

Learn More

Vetting

How Nesbitt Realty vets renters for our clients.

Learn More

Reserves

What is a contingency reserve account?

Learn More

Territory

Where does Nesbitt Realty manage rental investments?

Learn More

Clients

Who uses Nesbitt Realty management services?

Learn More

Contact

Call (703)765-0300 to speak to a property manager now.

Email

Do you want understand more about our community?

Our Guide to Real Estate is a handy resource for anyone who needs to learn more about Riverton and nearby communities.  The Guide to Real Estate compiles information regarding what has sold and what is for sale, and a couple of interesting facts that you might not be aware of.  Not to mention, our Guide has quite a few of the aspects of life in Riverton.  Certainly, most of this is helpful for buyers and sellers, but rental investors and renters will likely also find these tools to be somewhat useful.