February 15, 2017 Education, Homeowner Tips
Every HOA has a reserve fund for a strategic way to plan for expected and unexpected repairs and maintenance in the future. Here are three reasons why…
Your elected board members should plan and budget for your reserves, but we’ve also seen this task to be daunting for some HOAs. It’s not something your community should ignore and if you see this happening, don’t hesitate to reach out to us for assistance in planning.
Depending on your community, your HOA may have figured out the best and worst case scenario for those expected and unexpected repairs. If you have a pool you may want to adjust accordingly if you have huge turnouts and use during the summer. Or if you are hit with hard weather in the winter, you may assume some roof repairs.
We recommend every HOA get a Reserve Study done to analyze repairs and replacements. This should be done yearly as inflation can really affect the budgets. Even if yearly repairs aren't needed, it’s important to plan accordingly in your budget. Realty Times gives us the math, “…if roof replacement costs $100,000 and the remaining useful life is 25 years, then $4,000 is required yearly to pay for the work when it's needed…Each year, the reserve fund needs to be adjusted by area inflation and the interest earned on the invested reserve funds.”
Remember, never hesitate to attend HOA meetings and ask questions if you want more detailed information about your community’s reserve funds. There is no pre-determined set of funds that go into a reserve fund, and it’s not mandatory to have one. What we find is that homeowners don’t like having a surprise assessment because their HOA didn’t plan for any expected or unexpected repairs.
If you believe your HOA needs more information regarding Reserve Funds, we’re here for you.
Source: Realty Times What is a Reserve Study in your HOA
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