Many associations have relatively high insurance deductibles, sometimes as much as $100,000 or $200,000. This is the case in particular in hurricane prone areas. I have been asked several times if it should be a reserve item or how to go about funding it. Sometimes I already encounter it in an association’s current reserve schedule […]
Maximize Reserve Fund Interest
One of the powerful things about having a large reserve fund balance is the ability to gain interest earned on the money in the fund. The last several years since the Great Recession, however, have produced paltry returns, typically less than 1% for regular savings or money market accounts. Many associations just use money market […]
Reserve Study Frequently Asked Questions Part 7
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 […]
What is the Purpose of a Reserve Study
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. Part of the Budget 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 […]
How a Reserve Study Can Save Your Association Money
Reserve studies are beneficial to associations for several reasons. Proactively Get Organized 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, […]
Reserves for New Community Associations
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 […]
Reserve Study Frequently Asked Questions Part 6
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 […]
What Your 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: Keep Property Values Up The biggest reason why you fund reserves is they help maintain and increase property values. It is very difficult […]
Identifying Reserve Items
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. Condominiums For condominiums in Florida, Florida Statutes 718.112(2)(f)2, says that reserves must be established for capital expenditures and deferred maintenance of: […]
Reserve Study Frequently Asked Questions Part 5 – Florida Specific
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 […]
Reserve Study Resources
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 […]
How to Make a Reserve Study Most 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. List All of the Reserve Items One thing an association can do is to make a list of all […]