Why should we hire a professional to perform a reserve study?
In short, reserve analysts have access to all of the necessary resources to complete an accurate analysis of your reserves. They also have a thorough knowledge of the inner workings of community associations such as an HOA, condominium, or co-operative. Due to their continual experiences with other board members, they can provide your board with proper guidance.
We have historically assessed in our community. Why should we have a reserve study?
Assessing members is not the fairest way of handling reserves. Having a reserve study and sticking to is a much better approach. This is true because it assesses the member for the exact time they live in the association and builds funds over time to pay for the replacement of the item. An assessment, on the other hand, happens randomly when the useful life of an item ends.
Are reserves are underfunded. What should we do?
Hopefully, this is a situation you will not encounter. However, in the wake of the economic downturn, it is becoming more and more common for associations to be underfunded. There are a couple of options in this situation: issue a special assessment, get a bank loan, get a line of credit, or delay replacing items until they can be properly funded.
What items should be placed on the reserve schedule?
This is one of the most common problems we see when consulting with associations. Often times, associations will have some of the proper items, but not all of them. In Florida, the mandatory items for an association are painting, paving, roofing, and any other item(s) over $10,000. The rule of thumb is that anything that lasts more than a year and has a repeating useful life cycle can be considered a reserve item. Some of these typical items to include on a reserve study are playground equipment, tennis court, swimming pools, clubhouses or cabanas, fitness equipment, gate systems, security systems, mail kiosk, HVAC, etc. In high-rise developments other items that may be considered include electrical and mechanical systems, fire systems and alarms, elevators, and pumps.