The banking disruption has significantly impacted real estate investors, particularly those working with property management companies. Several regional banks have experienced financial disruptions, leading to a loss of confidence in the banking sector.
To make up for this, real estate investors should consider the banking institution they use and whether their bank accounts are set up as legal and proper trust accounts. The Federal Deposit Insurance Corporation, or FDIC, has intervened by guaranteeing all depositors’ funds. Property management companies hold significant money on behalf of their owner-clients and tenants, which should be held in a trust account.
FDIC insurance provides coverage up to $250,000 per beneficiary, and if the property management company has a proper trust account set up, each owner-client is covered up to the $250,000 limit. If the company has not set up a trust account, the entire account is only covered up to $250,000. This is a crucial distinction for real estate investors to ask their property management companies about.
Caldwell Property Management ensures the safety of its owner-clients and tenant-residents’ funds, as their bank accounts are legally compliant trust accounts. As property management is a relationship between the company, owner-clients, and tenant-residents, it is essential for investors to consider their property management needs when choosing a property management company.