What is a HOA Reserve Study
As this info-graphic show — a HOA reserve study is a process by which the association conducts an in-depth analysis of the physical condition of shared assets and amenities as well as of its reserve funds. The association can conduct this study by themselves, although it is a more common practice to hire the service of independent consultants to ensure the reliability of the analysis as well as the accuracy of the cost estimates.
Your Future in a Nutshell
The output of a reserve study is supposed to give the whole community an idea which of their shared assets need an immediate maintenance improvement as well as appropriate funding plan to offset the anticipated reserve expenses. Some of these shared assets include walkways, shared rooms, clubhouses and swimming pools, parks, heating and cooling equipment, roofs, fences, etc.
Use Experts
To ensure that the final insights and budget are balanced and realistic, the independent consultants are often made up of a group of engineers, designers, and architects. Because of their extensive knowledge about structural analysis and cost estimates, there can be no doubt that they are the best people to consult when conducting a reserve study.
To know more, check this simple guide from Lockatong Engineering that will help you plan and execute a reserve study for your community today.
- Funding HOA Reserves For the Common Good - February 15, 2017
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Great article, and info-graphic on a very important subject. We see way too many capital improvements that are needed, but can’t be done because they don’t have enough in the reserve. We always recommend that they use the savings that we find them to add to reserves for various improvements.
Thanks Tina
Proper planning for reserves combined with what you do can put a community in a great financial position.
Great article. Boards should also give careful consideration to the quality of renos they want in the future. Do upgrades make sense to support property value or energy efficiency savings? If it’s a big replacement project like windows, a board may have to make decisions 10 – 25 years in advance to properly save the funds. The cost delta on builder-grade vs good vs excellent windows may be north of $1 million. Data collection and strategic planning by the board and management are needed to give the engineers the correct direction to accurately forecast future repairs, replacements or upgrades. And I suppose downgrades as well.
Very true, strategic planning is key. An HOA I was involved with found that a larger upfront expense for siding instead of painting every 5 years saved them a lot over the long run. Incidentally the new siding looks much better too.
Where I live in Henderson NV, two members of my HOA Board of Directors ILLEGALLY CHANGED THE QUANTITIES that were originally compiled by a licensed Reserve Specialist and money disappeared from the accounts. How does that work?
Spot on ! Many HOAs in WV are at the crossroads of big, larger-than-life decisions, sadly they believe they are paying too much and now can’t figure out how to get the “enough money” to do their roads. While some HOAs have collected delinquencies that increase their balance they believe returning a few dollars for all for one year’s assessment a reward. Thereby enticing homeowners to always pay their assessments. It’s a loose loose situation. The cartoon is great – as they say “a picture is worth a thousands words”. I’m going to pass this article around to WV HOAs – the truth is out there!