The Role and Value of Reserve Studies.
There are plenty of things beyond your control. You may plan and take precautions, and still end up with property damage, unexpected repairs, and much-needed upgrades to your condominium building. That’s why your HOA needs a reserve study. A reserve study is vital to the financial and structural of your community, the Cooperator says. We’ve prepared a short guide to help you understand why.
What is the Role of a Reserve Study?
A reserve fund study is used to determine the current state of your homeowner’s association reserve fund, which is a savings account that covers maintenance, repairs, and replacements to the building. That includes any repair work done on shared amenities or parts of the building, such as the parking lot, driveways, sidewalks, roofs, walls, and more. By figuring out how long these amenities will last, the report gives you an idea of how much you need to ensure that you have enough funds and how much time you have to increase your funds.
Why is a Reserve Study Important?
The report’s estimate tells you the condition of your roof and when it’s likely to go. That gives you a timeframe, allowing you to make plans and keep a certain deadline in mind. Knowing that you only have about three or four years to increase your funds, for instance, will influence your future plans. If your association isn’t prepared for emergencies or contingencies, it won’t be long before you and the other members of the board managing your reserve fund will be caught off guard with the barrage of unexpected costs. If you’re severely underfunded, any kind of property damage will lead to a lot of problems.
What Will It Include?
The reserve study comes in two parts: there’s the physical analysis and financial analysis. Both sections will provide information on different parts or assets of the association. Which ones need repairs? How much service life do they have left?
Who Will Perform the Reserve Study?
Find a company that offers reserve study services. Start by taking a close look at the firm’s credentials. Is it qualified to take on the job? Who will perform the study? Talk to the person assigned to you. Also, find out how long the study will take. Some take months to a year for the study to be completed, depending on the size of the community, the state of the community’s assets, and the number of those assets.
How Do I Choose a Firm?
Look for an organization that’s been in the business for years. Longevity is typically a mark of trustworthiness. Any organization that’s been around long enough is bound to be doing something right, especially if in a specialized niche like this. Reading through the reviews and feedback will also help you acquire more details about the company and if it’s a wise choice to hire its services.
Get a team of experts to perform a reserve fund study on your community. Use the resulting information to plan your finances properly.