What is a Maintenance Reserve and how does it work?
A Maintenance Reserve is a sum of money that is held in the Operating Cash Balance of your property to be used on any expenses, including but not limited to repairs, maintenance, services, management and other fees necessary to manage the Property prior to Rent Income or Owner Contributions becoming available.
A reserve can be in the amount of:
- $500, if the Property has 1-3 units;
- $700, if the Property has 4-7 units;
- If a Property has more than 7 units, Agent will determine the amount appropriate to the Property.
For example, a single-family property holds a reserve of $500. On the 25th of the month, there is a maintenance bill due in the amount of $150. Since it is the 25th of the month, there is no rent income in the properties operating cash balance, as rent is due on the 1st and owners are paid on the 9th. $150 from this $500 reserve will be used to pay the maintenance bill bringing the balance of the reserve down to $350.
The reserve is required to be held in the full amount each month, as specified in the management agreement. So, in the above example, when rent income is deposited on the 1st of the month, $150 of the rent income will be used to bring the reserve back to $500, and the amount of funds sent to the owner will be $150 less.
The maintenance reserve is something you can pay at any time during the onboarding process. To pay this, you can log into your owner’s statement and click on the Contributions tab. This will allow you to pay via E-Check or Credit Card. You can even choose to have this paid from the first month’s rent payment. If left unpaid and we do not hear otherwise, it will be paid via first month’s rent income.
Upon Real Property Management Solutions no longer managing the home, the remaining reserve funds will be sent to the owner within 60 days of ending of the contract.