Guest Post: Reserve Studies - An Important Budgeting Tool
What does your community need over time? Understanding the day to day operations of your Association is only half the battle when it comes to making a budget. The most difficult line item to assess is what to put into reserves. Communities that do not save money each year for predictable maintenance items, such as roof replacement and pool resurfacing, can find themselves implementing "special assessments". Special assessment result when the individual owners are billed additional amounts above the standard assessments. This can be hundreds and sometimes even thousands of dollars in one calendar year.
The best way to predict your expenses, particularly for large communities with a number of amenities, is with a Reserve Study. These reports are produced by engineers who study the average life span of each asset and ascertain the projected replacement time and estimated cost. With this data, boards can select a reserve strategy with more confidence. These reports are an investment, and generally cost from $2,000 to $6,000, but could be more. That being said, the absence of the report can create long-term issues for the Association, as significant budgeting errors can be made.
For samples of Reserve Study reports as prepared by Reserve Advisors, click the links below.
Article Compliments of Reserve Advisors
Regional Account Manager