🏦 Understanding Reserve Funds in Tokenized Real Estate

Last updated: October 25, 2025
Contract Version: PropertyReserveFundManager v2.0.0-UUPS

📘 What Are Reserve Funds?

Think of reserve funds as your property’s financial safety net 🛟. They’re on-chain savings set aside to handle predictable costs like taxes, insurance, maintenance, and vacancies — the unglamorous but essential stuff that keeps your investment smooth and stress-free.

On SecondaryDAO, every property has its own PropertyReserveFundManager smart contract, ensuring transparency, automation, and zero surprises.

💡 These aren’t fees. They’re protective cushions that ensure your property operates seamlessly — even when things get bumpy.

🗂️ The 10 Reserve Categories

Every property you invest in has a mix of one-time setup reserves and auto-replenishing reserves.

💼 One-Time (Setup) Reserves

These are paid once during the property raise and aren’t replenished:

• 🏛 DAO Listing Fee – modest contribution to maintain the platform

• 🧰 Deferred Maintenance – covers known fixes upfront

• 🏢 LLC Setup Fee – legal entity creation

• 🏠 Appraisal / Inspection – professional evaluation costs

• 📑 Transfer Taxes / Fees – standard closing costs

• 📎 Miscellaneous – any small extras (usually zero)

🔁 Auto-Replenishing (Ongoing) Reserves

These stay topped up through rental income:

• 🏘 Vacancy Reserve – covers rent gaps

• 🧱 Maintenance Reserve – funds repairs and upkeep

• 💸 Annual Taxes – property taxes paid smoothly

• 🛡 Annual Insurance – ensures coverage never lapses

💰 Reserve Lifecycle

Phase 1 – Initial Capitalization (At Property Raise)

When a property is tokenized, reserves are funded upfront alongside the purchase.

Formula:
Total Raise = Purchase Price + Total Reserve Requirements

Example for a $200K Property:

Item Amount Property Purchase $200,000 Vacancy Reserve $10,000 Maintenance Reserve $5,000 Deferred Maintenance $2,500 LLC Setup $1,000 Appraisal $500 Transfer Taxes $2,000 Annual Taxes $2,400 Annual Insurance $1,600 DAO Listing Fee $1,500 Total Raise $226,500

This ensures every property starts off financially solid 💪 — no waiting on rent to cover bills.

Phase 2 – Allocation (Post-Sale)

Once tokens are sold, the smart contract automatically assigns funds to each reserve category — all visible on-chain.

Phase 3 – DAO Listing Fee

When trading starts, a small platform fee goes to SecondaryDAO’s treasury to keep operations secure and compliant. Then that reserve is zeroed out.

Phase 4 – Day-to-Day Operations

Every rent payment triggers:

1. 💵 Rent received

2. 🧮 System checks for shortfalls

3. 🔄 Reserves topped up (if needed)

4. 💸 Remainder distributed to investors

Everything’s automatic and transparent.

🔄 The Tiered Rebuilding System

To keep things balanced, the system adjusts how much rent is withheld based on how healthy the reserves are. Think of it as adaptive cruise control for your investment 🚗💨.

Tier Shortfall Withheld Description 🟢 FULL 0% 0% All rent paid to investors 🎉 🔵 TARGETED <25% Just enough monthly Light touch build-back 🟠 STANDARD 25–49% 50% Balanced recovery 🔴 AGGRESSIVE 50–74% 75% Faster rebuilding ⚫ EMERGENCY ≥75% 90% Safety-first mode

Example

Property Value: $200K
Total Required Reserves: $20K
Current Balance: $10K (50% funded)
Monthly Rent: $2,000

➡️ Shortfall = $10K (50%) → Tier = Aggressive Rebuilding
➡️ Withholding = 75% of rent = $1,500
➡️ Token holders receive = $500 (25%)

✅ Next month, the system recalculates automatically — no human needed.

🎯 Replenishment Priority

When rent is withheld, it’s allocated in this order:

1. 🏘 Vacancy Reserve

2. 🧱 Maintenance

3. 💸 Taxes

4. 🛡 Insurance

Each step is logged on-chain with time-stamped events, so you can see every move transparently.

📊 Transparency You Can Verify

Every transaction triggers public blockchain events showing:

• Rent received

• Tier applied

• Amount withheld

• Distribution to investors

• Remaining shortfall

You can literally watch your property’s financial health improve in real-time 🧠💎.

📱 Investor Dashboard Perks

From your SecondaryDAO dashboard, you can:

• View current reserve levels

• Preview next month’s rent split

• See tier status (with shortfall %)

• Track where every dollar goes

All powered by smart contracts — no spreadsheets, no guesswork, just math and transparency.

⚙️ Governance & Security

• 🧑‍⚖️ Admin controls for configuration

• 🔐 Multi-signature treasury for disbursements

• ⏸ Pause protection in case of anomalies

• 🧩 Upgradeable architecture for future improvements

Every property runs independently — no cross-drain risk, ever 🚫💦.

📈 Why This Matters to Token Buyers

✨ Predictable Yields: Your payouts are never interrupted by surprise expenses.
🏡 Stability: Properties stay insured, taxed, and maintained year-round.
🔍 Transparency: You can see reserve actions in real time — fully on-chain.
🤖 Automation: Smart contracts do the heavy lifting, no human meddling.
📜 Compliance: Built for El Salvador’s CNAD DSAP framework and beyond.

🧮 Example Timeline – $200K Property

Month 1 – Fully Funded 🟢

Reserves = $20K (100%)
Rent = $2,000 → Distributed 100%
Per Token (1,000 tokens): $2.00

Month 4 – Maintenance Event 🔧

$4,000 spent on roof repairs → 20% shortfall
System switches to TARGETED mode
Withholds $400/month until full again

Month 7 – Vacancy 🕳️

No rent for 1 month → Vacancy Reserve covers it
Next rent resumes with STANDARD rebuilding
Half of rent distributed, half rebuilt

🚀 Final Takeaway

SecondaryDAO’s reserve system isn’t just about covering costs — it’s about protecting your yield and stabilizing your property long-term.

• 10 transparent reserve categories 🧾

• 5 smart tiers that adapt to property health 📊

• 100% on-chain tracking 🔗

• 0 surprises 🎯

Your investment isn’t just tokenized — it’s intelligently managed.

Contract: PropertyReserveFundManager v2.0.0-UUPS
Testnet Address: 0x457cCf29090fe5A24c19c1bc95F492168C0EaFdb
Audit: Internal complete, external pending
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