Do you know the difference between contingency reserves and operating funds?
Operating funds are funds 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 Fairfax, 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 repairs and other incidentals that occur during property management. Although the money is in our escrow account, the money belongs to the real estate investor. 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.
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.
Fairfax Rental Management Resources
Basics
Elementary info regarding property management in Fairfax.
Getting Started
Learn more about getting started with property management
Find A Tenant
Market your property to rent to find a great renter in Fairfax fast.
Accounting
How does Nesbitt Realty keep track of income and expenses for landlords?
Cost
A list of prices of rental management services in Fairfax
Vetting
How Nesbitt Realty vets tenants for landlords.
Reserves
What is a contingency reserve account?
Territory
Where does Nesbitt Realty manage rental investments?
Clients
Who uses Nesbitt Realty management services?
Do you need understand more about this local real estate market?
Nesbitt Realty's Guide to Real Estate is a free resource for anyone who needs to learn more about Fairfax and neighboring communities. The Guide to Real Estate includes facts about what has sold and what is currently listed, and some interesting facts that you may not be aware of. Not to mention, our Guide features some fundamentals of living in Fairfax. Yes, most of this is helpful for purchasers and sellers, but property owners and renters might also find the facts to be quite informative.
Landlord Reference
a good source for landlords in Fairfax
- Before you put a renter in your rental property in Fairfax
- Collections and evictions
- Communications with the tenant
- During tenancy
- End of lease term and what happens when a tenant breaks the lease
- How does the landlord get paid?
- How your management company handles the association and your community
- How your property manager handles utilities
- How Nesbitt Management finds renters
- Insurance matters for rental investors using our property management
- How Nesbitt Management handles keys
- Fairfax landlord responsibilities
- Maintenance, repairs & inspections for your property in Fairfax
- The move-in inspection
- Property management information form
- Selling a 1031 tax exchange & more
- Starting our management of your rental investment
- When landlords don't yet know their new address
- Vetting tenants in Fairfax