If you love where you live and your condo association is pretty great too, a reserve study can help ensure everything stays that way for you and others who live there after you.
Whether you are a property owner and member of your community association or a board member, you might already know the importance of a reserve study: Identifying and budgeting for future capital improvements. Doing so ensures your property’s common elements continue to look attractive and well-kept, adding to your community’s overall quality of life.
Here are three reasons why your association needs a reserve study.
Reserve Studies Provide a Clear Road Map for Future Capital Repairs
Reserve studies put capital project needs on your radar. By providing recommendations to repair, replace, restore and maintain your community’s common components, you will know when to expect capital project needs. You’ll also receive insight on prioritizing the projects, which ensures the most efficient use of reserve funds.
Any common area – concrete facades, garage floors, pool decks and roofing, for example – are evaluated during the initial reserve study as well as during reserve study updates. Areas of concern are documented; this takes the guesswork out of what needs to be done and when. It’s important to track the condition of your community’s common components because it allows you to execute a plan to make sure components are properly maintained. And, with a plan, you’ll mitigate the chance of any hidden surprises.
Reserve Studies Help Members Understand Upcoming Financial Obligations
When properly prepared, a reserve study not only details the anticipated timing of capital projects, but also gauges the overall condition of your association’s reserve fund and long-term budget needs. Setting aside money to cover the cost of future capital projects is the responsibility of every current association member – not just those who live on the property when the component requires repair or replacement.
Experienced analysts know how to calculate the amount of money needed and when by looking at the schedule of capital projects and factoring future costs with current reserve funds to develop a long-range funding plan. The result? A recommendation for annual reserve contributions that your association can depend on with complete confidence when creating your long-term financial strategy for funding capital expenses.
Having a detailed and well thought out capital reserve plan will allow you and your neighbors to avoid surprise special assessments and ensure everyone is paying their fair share toward a long, safe future together in your community.
Reserve Studies Create Board Member Accountability
As you know, the board members for whom you vote have the authority to make decisions on your behalf. With an up-to-date reserve study in place, you should be able to truly entrust the care of common area assets to them. The professional guidance provided by reserve analysts makes it easier for board members to decide whether to repair or replace something. Facing dilemmas on either moving forward with big ticket projects or on deferring them should not be an issue. Reserve studies, especially those that are updated frequently, give board members much of the intelligence they need to make informed decisions that support both the physical and financial health of the community.
Reserve studies are a vital aspect of community living. The onus is on the board to understand the value of having a reserve study and to realize that they are an indispensable tool to supporting the long-term needs of the association.