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May 31, 2013 By admin

Reserve Study Frequently Asked Questions Part 3

Reserve Study FAQ

What is a Reserve Specialist (RS)?

A reserve specialist is someone who prepares reserve studies that has earned the RS designation through the Community Associations Institute (CAI).  CAI is the largest organization in the country that specializes in all aspects of community living, more specifically condominiums, co-operatives, and home owner associations.  To earn the RS designation through CAI, the reserve study preparer must have been performing reserve studies for no less than three years and have completed at least 30 reserve studies over that time, received two written recommendations from users of their reserve studies, and give five references for their reserve studies.  Also to be eligible, the applicant must have an engineering, architecture, or construction management degree.  Additionally, the applicant must submit at least one report for a review from CAI to make sure its meets their national reserve study guidelines and standards.  Once the RS designation is earned, the reserve specialist must also abide by the Reserve Specialist Code of Ethics from CAI.

How is inflation figured in reserve study reports?

Since inflation in future years is unknown, the best way to project future inflation is with historical data.  At the time of this writing, inflation over the past years had an average rate of 2.55%.  However, the inflation rate used in the report is up to the reserve study preparer.  In some cases, there may be a better reason to use a 5-year, 10-year, or 30-year moving average.  Additionally, future economic forecasts may be factored in to the decision.  Typically, most reserve studies use 2.5% – 3.0% for their inflation factor in their reports.  The following link discusses inflation in reserve studies in more detail:

https://reservestudyfl.com/reserve-study-inflation/

Are there any publications on reserves or reserve studies?

Surprisingly, there are very few.  The most comprehensive one that I am aware of is Reserve Funds: How and Why Community Associations Invest Funds.  It gives a good overview of what is necessary and what to look for when planning on how to set up reserve funds and use them properly.  This book is available from CAI.  A link to it can be found here:   https://cai.caionline.org/eweb/DynamicPage.aspx?site=CAI&WebCode=storeItemDetail&parentKey=40d7a2c9-c272-481c-be71-9d219cb8f9bc

Another good resource is one that was published by the Department of Real Estate in California.  Some of the information is California-specific, however it still gives a very good overview and reserve studies, their importance, and developing a proper funding plan:  http://www.dre.ca.gov/files/pdf/re25.pdf

Filed Under: Blog Tagged With: FAQ, Reserve Study

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