What a Reserve Specialist Can Do For Your Association

Reserve Study

Certain expensive common elements must be replaced every 10, 15, or 20 years. Part of preparing the budget includes calculating how much money the association must set aside each year so the needed funds are available when the concrete or hot water heaters need to be replaced. To make sure estimates are as accurate as possible, consider working closely with a reserve specialist.
The reserve specialist will visit the community to inspect it and prepare a written reserve study for the association. This study will provide the board with guidance on how to keep the association’s physical assets from deteriorating faster than the financial assets increase.
The  report from the reserve specialist should include:

  • An inventory of all common area items
  • Recommendations on what needs to be replaced and when
  • What the replacements will cost
  • A proposed plan for paying for the replacements

The reserve specialist chosen by the board should have the expertise and experience to accurately determine the life cycle of all common components and should help the board estimate the cost to repair or replacement them.   Be sure the reserve specialist is also an expert at analyzing the financial resources needed to maintain the common elements over time and is able to advise the board how to balance the size of the reserve fund against the deterioration of the common elements.
Since the community’s physical assets are constantly decaying, the guidance of a reserve specialist helps the board protect those assets and keep the community looking its best at all times—and that helps protect property values!
This article is provided by Ascent Management Professionals.