What is a contingency reserve account?

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 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 Wilton House, 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 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 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.

 

Wilton House Rental Management Resources

Basics

Elementary info about what rental managment in Wilton House.

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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 dependable tenant in Wilton House fast.

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Accounting

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

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Cost

A breakdown of prices of rental management services in Wilton House

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Vetting

How Nesbitt Realty checks the backgrounds of renters for our clients.

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Reserves

What is a contingency reserve account?

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Territory

Where does Nesbitt Realty manage rental 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 rental specialist now.

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Do you want know more about this area?

Nesbitt Realty's Guide to Real Estate is a helpful resource for anyone who wants to learn more about Wilton House and neighboring areas.  The Guide to Real Estate compiles information regarding what has sold and what is for sale, and a few shocking facts that you might not know.  In addition, our Guide spotlights quite a few of the aspects of residing in Wilton House.  As a matter of course, most of this is useful for buyers and sellers, but landlords and renters might also find these resources to be very sobering.