An Operating Reserve is an account set on each portfolio that is used by property management companies to reserve funds for the purpose of covering unexpected expenses due between monthly rent collections or which could not otherwise be covered by portfolio income. An Operating Reserve is a virtual account that does not appear on your chart of accounts but, for all intents and purposes, is treated like an account where you may perform all of the following actions:

1. Transfer Portfolio Income (i.e., rental income which is deposited into a portfolio's Rent account) to the portfolio's Operating Reserve.

2. Add Owner Contributions to the portfolio's Operating Reserve.

3. Use funds from a portfolio's Operating Reserve to cover unexpected expenses due between monthly rent collections or which could not otherwise be covered by the portfolio's income.

4. Draw funds from a portfolio's Operating Reserve to refund an owner, such draw referred to as an Owner Draw.

The Operating Reserve is an optional account which your management company may opt to use or not use.