What sets aside funds for future major expenses in property management?

The correct choice is reserve funds, as these are specifically allocated funds set aside for future major expenses that may arise in property management. Reserve funds are crucial for financial planning and ensuring that a property can address significant repair or replacement costs, such as roof repairs, HVAC replacements, or other capital expenditures that are not part of regular operating expenses.

By maintaining a reserve fund, property managers can mitigate the impact of unexpected costs on the overall budget and ensure the property remains well-maintained and financially stable. This proactive approach allows for a smoother financial operation and helps property owners avoid the burden of large, unbudgeted expenses that could strain their resources.

In contrast, operating expenses refer to the day-to-day costs of running a property, fixed expenses are consistent costs that do not change over time, such as mortgage payments, and contingent funds are often set aside for less predictable expenses, which may not be specifically related to major capital improvements. These options do not serve the same purpose as reserve funds in building a financial cushion for future large-scale expenses.