A capital reserve is a fund created to finance major, long-term investments, property or infrastructure enhancements within a real estate property. These are set aside from profits and retained earnings specifically for future large scale repairs, renovations, or unexpected large expenses.
A maintenance reserve is a fund allocated by property owners or a property management entity specifically for maintaining and repairing a property. This financial reserve is crucial to ensure that a property remains functional, safe, and visually appealing over time.
Replacement reserve is a specific fund set aside from the net operating income to cover the eventual wear and tear of short-lived assets, such as carpeting, appliances, and other items that have a defined useful life.
A reserve fund is an account set aside to cover future building maintenance expenses, mortgage obligations, and other forthcoming financial requirements. These funds can be mandated by lenders, such as escrows, to ensure timely payments for property-related costs.
