How do you handle a reserve fund that the property manager holds?

Setup & Support
1

My property management company holds $500 for repairs. How would I handle this transaction if I give $500 to the property management company to hold? Then how would I handle it when they use some of this money for a repair?

I did a “Transfer - Owner Contribution” but that doesn’t seem right since it doesn’t show up on the balance sheet.

Now there was a repair under $500 that was paid for out of this reserve and I will have to send money to refill the reserve. What would be the best way to record all of this?

2

@ehaug87 “Transfers > General Escrows” might be a better spot for these funds. Your PM is essentially escrowing the funds, just like a lender might escrow for property taxes or insurance. You’d want to handle actual expenses paid from the PM account the same way you’d handle a tax or insurance payment from a loan escrow.

Here’s how that works: Split & Categorize Mortgage Payments

1 Like
3

Thanks a lot for the help! That makes sense.

I’d assume you would want to handle a security deposit from the tenant that the property manager holds the same way?

4

How would you then record any distribution of those reserves held by my PM? Those reserves can then become income, which when I create and income transaction, it wouldn’t give me the ‘paid from escrow’ option (which would move it from an asset on my balance sheet to income on my income statement). How would I create a ‘negative’ escrow transaction to make sure my balance sheet stays accurate.

5

Using the escrow wouldn’t be right. I have my escrow account setup from my bank, this would be a separate escrow account.