Archive for the ‘Blog’ Category

Reserves for New Associations

June 30th, 2014

There is a lot of organization involved when setting up a new community. Budgeting for reserves is not necessarily the first thing that new boards may be concerned with. However, the opposite effect of not setting up reserves properly can have lingering effects. Money that is not set aside is an opportunity lost to fund for reserve items. Some of the long lasting items that are not easily conspicuous sometimes go unfunded. Communities that are responsible for bridges, storm water drainage, lift stations, pond deferred

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Reserve Study Frequently Asked Questions Part 6

May 31st, 2014
Lakehouse

What are some of the most typical reasons that a reserve study would require revisions? A reserve study can require revisions for a number of different reasons.  Some typical reasons may be that the reserve study had omitted a reserve item or certain group of items.  It is also possible that the reserve study included some items that the association may not want to fund.  In addition, the reserve analyst may not know the ownership of every item in the community–some associations lose responsibility and

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What Your Reserves Do

April 30th, 2014
What Reserves Do

Reserve funds are the backbone of community associations.  It is how they are able to pay for big ticket repairs and replacements.  Funding reserves is advantageous to your association for several reasons: Keeping property values up.  The biggest reason why you fund reserves is they help maintain and increase property values.  It is very difficult to sell a property when the community is in disrepair or a new owner will be inheriting a special assessment.  In condominium communities, FHA has to approve communities for their

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Identifying Reserve Items

March 31st, 2014
Shuffleboard

Identifying all of the reserve items in an association can be difficult.  One of the most common budgeting mistakes that associations make is not getting all of the proper items on the reserve schedule.  For condominiums in Florida, Florida Statutes 718.112(2)(f)2, says that reserves must be established for capital expenditures and deferred maintenance of: Roofing Painting Pavement Resurfacing Items having a deferred maintenance expense or replacement cost more than $10,000. It should be noted that co-operatives have basically the same reserve requirements in Florida Statutes

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Reserve Study Frequently Asked Questions Part 5 – Florida Specific

February 28th, 2014
Condominium

Do I have to have a reserve study for my association in Florida?   No.  There is no part of statues 718, 719, 720 (condominiums, co-operatives, home owner associations, respectively) that mandates that associations get a reserve study.  Not only do these associations not need a reserve study, but they can choose to waive funding of reserves with a majority vote.  Clearly this is not the recommended route, but some older associations have never collected reserve funds–they just always issue a special assessment.   If

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Reserve Study Resources

January 31st, 2014
Typical Reserve Itsms

Since reserve studies and reserve funding are a niche aspect of community association planning, finding information about their background and methodology can be difficult.  There is generally a lack of easily accessible information about reserve funding on the internet or in books.  The following list is some of the best information available on reserve studies (in addition to this website, of course): The most comprehensive one that I am aware of is Reserve Funds: How and Why Community Associations Invest Funds.  It gives a good overview

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How to Make a Reserve Study Most Effective

December 31st, 2013
Effective

It has been discussed before that the best reserve studies are a team effort.  In order to make a reserve study most effective, it is important to thing of the different parts that go into them. One thing an association can do is to make a list of all reserve item components and give them to the reserve analyst.  Obviously, the reserve analyst can’t include items that he didn’t know were supposed to be included.  Additionally, at the beginning of the assignment, the reserve analyst

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Reserve Study Checklist

November 30th, 2013
checklist

When making a decision on who is reasonable candidate to perform a reserve study for your association, here are a few things to keep in mind. Make sure the firm you select is truly in the business of providing reserve studies. Sometimes associations wind up contacting someone who can perform reserve studies, but does not specialize in them.  This is a setback because someone who only does reserve studies a fraction of the time, may not know the nuances of performing the assignment. Make sure

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Understanding Your Reserve Study

October 31st, 2013
Reserve Study Reports

The first time you receive a reserve study, it can be a lot of information to take in.  Sometimes the client can be surprised at the suggested funding amounts.  This can be referred to as “sticker shock.”  However, it is important to remember that this is the recommended amount.  This recommended amount is not a mandate on the way the association will spend its money.  Rather, the association has the ultimate say in how their money is spent.  One important thing to note in the

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Most Common Reserve Funding Mistakes

September 30th, 2013
Subdivision

  1.      Not getting the proper reserve items on the reserve schedule.  This is the most common mistake associations make when budgeting for reserves.   They unknowingly omit some items that should be on the schedule.  Most associations are aware of roofing, painting, and paving requirements, but some items that are not often thought about are the hidden or concealed items like water lines, sewer lines, storm drainage, perimeter fencing, lift stations, pumps, fire systems, exercise equipment, sea walls.   2.      Failing to fund reserves close

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