Archive for the ‘Blog’ Category

Reserve Study Frequently Asked Questions Part 7

September 30th, 2014
Pool Cabana

We have to make very costly renovations to our building and do not have the reserve funds to cover it.  What should we do?  In this case, there are two realistic options the board has.  The first is to get a bank loan for the community to cover the cost of the renovation.  There are specific banks that specialize in association loans, so there may be someone willing to help.  However, the bank will only loan the association money if it has demonstrated to be


What is the Purpose of a Reserve Study

August 29th, 2014
Reserve Study Purpose

A reserve study is a tool for budgeting.  Reserves funds are part of the budget.  A reserve study will help the association manage their long-lasting assets. Each year an association puts together a budget.  Most of the budget consists of one-year-only expenses.  The remaining portion is for items that will last longer than one year.  Even though these items last longer than one year, they get annualized (or averaged) into a one year number in the budget.  For example, if a reserve item costs $10,000


How a Reserve Study Can Save Your Association Money

July 31st, 2014

Reserve studies are beneficial to associations for several reasons. A reserve study helps an association get organized with its capital assets. A reserve study will have an itemized section for that shows projected asset repair and/or replacement year by year. This serves a meaningful purpose. If an association is not well organized, they may not know how much a reserve item will cost to replace or when it will be projected to be replaced. With a reserve study, however, the association has an effective tool


Reserves for New Associations

June 30th, 2014
Condo Building Reserves

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


Reserve Study Frequently Asked Questions Part 6

May 31st, 2014

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


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


Identifying Reserve Items

March 31st, 2014

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


Reserve Study Frequently Asked Questions Part 5 – Florida Specific

February 28th, 2014

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


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


How to Make a Reserve Study Most Effective

December 31st, 2013

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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