Every licensed property manager is legally required to hold tenant funds in a trust account, also called an escrow account in some states, that is strictly separated from the PM's operating accounts. Rent payments, security deposits, and tenant reserves go into the trust account. The PM then distributes owner disbursements from the trust account to the owner's personal or LLC bank account on the scheduled date. Commingling tenant funds with PM operating funds is one of the fastest ways a PM can lose their license. For owners, the existence of a trust account is the legal mechanism that protects your rent and your tenants' security deposits if the PM goes bankrupt or has financial problems. When vetting a PM, ask specifically about their trust account banking setup, whether security deposits are held in a separate interest bearing trust account, and how reconciliations are performed. Good PMs reconcile their trust account monthly and can produce a trust account report on demand.
Example
Your PM holds 175 units across their portfolio. Monthly rent collected deposits into the Rent Trust Account. Security deposits held in a separate Security Deposit Trust Account per state law. On the 12th of each month, the PM disburses owner distributions out of the Rent Trust Account to each owner's individual bank account.