Frequently Asked Questions

What are “Adequate” Reserves?

“Adequate Replacement Reserves” is defined as a Replacement Reserve Fund and stable and equitable multi-year Funding Plan that provides for the timely execution of the association’s major repair and replacement expenses as defined by National Reserve Study Standards, without reliance on additional supplemental funding.

How do you determine the remaining useful life of a common element?

Reserve Advisors’ engineer independently determines the remaining useful life of each common element. First, we meet with management and/or board members. Our dialogue allows the engineer to gather important background information on the property. It’s also an opportunity for the property manager and/or board members to describe any problems the property is experiencing. After the meeting, the engineer performs the property inspection to record, measure and assess the current condition of each common element, looking for ‘outliers’ in condition. The engineer will pay special attention to problem areas. As part of the physical analysis, the engineer takes photos to document the condition of the common elements. Based on the physical analysis of each element, the expected life of each common element and variances from the expected conditions, the engineer estimates a remaining useful life for each. Where partial replacements and capital repair is a more cost effective solution, our recommendations can save the community thousands of dollars.

How do you determine future replacement costs?

We base our estimates of replacement costs from privately sourced data, our proprietary database, the unique conditions of your property, and our unmatched cost-engineering experience. Our privately sourced data reflects only your prevailing local labor and material costs. These costs are individually researched from the databases of R.S. Means, an authority on local union and non-union based labor and local material costs. We further include premiums for demolition, disposal, and your unique existing conditions. We also apply information from our proprietary database of thousands of actual replacement projects, many specific to your area. Our engineering expertise and local contractor information further assures the accuracy of replacement cost estimates.

Do you include inflation for future replacement costs?

Our research of inflation for buildings, systems and civil construction is a key element of Reserve Advisors comprehensive reserve study to ensuring an adequate and reasonable funding plan. We continuously research inflation for materials and construction labor in your location. We then monitor economic trends from multiple sources to arrive at a reasonable estimate of the near-term inflation rate for your community. Periodic reserve study updates will adjust this predicted rate, replacement costs and other factors to keep your reserve study and the funding plan accurate and dependable.

Do you inspect roofs?

We document observable defects in all types of roofs. Flat roofs are subject to numerous possible defects because of their potential complexity. We will inspect flat roofs where safe access (stairs or ladder permanently attached to the structure) is available. Condition defects in sloped roofs are visually observable from the ground with telescopic cameras. Common factors we consider are age, color, discoloration, exposure to sunlight, observable defects in the roofing tabs, hail damage, pitting, dimples and granular loss to the shingle.

Do you do invasive/destructive testing?

A reserve study by definition of the CAI National Standards is non-invasive and excludes destructive testing. Our comprehensive reserve study may recommend as appropriate invasive testing as part of a near-term future replacement project when the scope of the replacement project includes unknown conditions.

Do you recommend fully funding reserves?

There are four general funding strategies for funding reserves: baseline funding, threshold funding, full funding, and statutory funding. The full funding strategy is the most costly strategy of the four as it identifies the fully funded balance for each individual component and the funding required to keep the overall reserve balance at or near 100% of the combined fully funded balance of all components. With this method, associations begin fully funding for components that may not be replaced for several decades, which can result in carrying significant reserve balances year-over-year.

We recommend threshold funding for most associations. This strategy aggregates all future expenditures and calculates annual reserve contributions such that the reserve balance never reaches a minimum threshold. Maintaining a minimum threshold reserve balance in any given year minimizes the risk of additional assessments. Each reserve study is individually prepared and takes into account your association’s unique characteristics, ensuring our funding recommendations maintain an adequate, not excessive, reserve balance. In Florida, threshold or even baseline funding (allowing reserves to drop to $0) is considered “fully funding” the budget as both methods provide a path (budget) for adequate funds for replacement of the reserve components, without maintaining excessive reserve balances. Fully funding the budget is often confused with maintaining a fully funded balance, but they are two very different concepts and strategies.

Does your reserve study comply with the CAI Reserve Study Standards?

Reserve Advisors fully supports CAI Reserve Study Standards. As a National Corporate member of CAI, we participate in and support numerous local CAI Chapters. It’s part of our everyday commitment to more than 370,000 community associations. Our co-founders are founding members of CAI’s Reserve Committee that established CAI’s National Standards for Reserve Study providers. If you would like to read about CAI’s National Reserve Study Standards, click here.

Do you use subcontractors to perform a reserve study?

Reserve Advisors’ Core Values only allow our using full-time dedicated engineers, not subcontractors, to conduct your reserve study. Professionalism and Accountability are key elements of our everyday commitment to each customer and eachother. Our reserve studies are a product of our attitude to see it, own it, and do it competently and professionally.

How do you determine what to include in the reserve study?

Reserve Advisors’ starts by listening to your goals in the context of our proposed reserve study and scope of common elements to include. After engagement, we request a copy of the declaration and bylaws which define the common elements and homeowner property. Further, our engineer reviews your maintenance budget and spending to understand which replacements occur as normal maintenance. Your Reserve Advisors comprehensive reserve study will list the common elements with remaining lives, common elements without definable lives otherwise known as ‘long lived elements’, maintenance, and finally property maintained by homeowners.

How long does it take to complete the reserve study?

Reserve Advisors will work to complete your reserve study within the timeframe you specify. Absent a particular timeframe, our clients receive their reserve study within four weeks of our inspection and receipt of any necessary information to complete our service.

How much does a reserve study cost?

As a fiduciary of your community, we understand your duty to demand value for the money you invest in a reserve study. Rather than ‘spending’ money on a standard reserve study, a fiduciary’s goal is to ‘invest their resources to minimize long-term costs.’ That is our common goal with each community association client as we strive to save you money with our long-term thinking on replacement solutions. Each reserve study is individually researched and written based upon the unique attributes of your community association. A quote for our reserve study service is without obligation but it all starts with our listening to your goals and our understanding the unique nature of your property.

Do we have to follow your reserve study recommendations?

Your local jurisdiction will not require that the community follow the reserve study recommendations. Several state and local statutes do require adherence to addressing the funding of reasonable reserves or disclosure of the findings of a reserve study and how the Board determined its annual reserve contribution. We recommend your community work with your management team, accountant and attorney to determine how best to fulfill the requirements of your state and local governing authorities.