Reserve contributions typically are one of an association’s largest budget line items (we often see them in the 15-40% range). Any line item that size deserves annual attention.
There are three types of Reserve Studies: Full, Update With-Site-Visit, and Update No-Site-Visit. A Full typically only needs to be done once for an association. After that, an association can choose between with-site-visit or no-site-visit updates, depending on what’s going on at their association.
In CA, it is mandatory that the Reserve information is updated every year, and that the update be a with-site-visit type at least every third year. Similarly, a number of other states have requirements for with-site-visit updates every third or fifth year (see legislation).
No-site-visit updates are very inexpensive. For associations across the country that hire us every year, we generally only perform minor tweaks to their Reserve Studies. For associations that contact us every third year, more serious adjustments to their assumptions and their recommended contributions are required. For associations that only contact us every fifth year or less frequently, it is generally a rescue operation. The physical and financial factors change on an ongoing basis, so it is easy for a Reserve plan to quickly get “out of adjustment”.
From my 26 years of experience, I recommend annual updates. And it doesn’t even have to cost a cent. If you don’t want to hire a professional to update your Reserve Study, we’ve developed a powerful web-tool called QuickReserves (see www.QuickReserves.com) with sophisticated “wizards” built in, making it easy for a boardmember or manager to update their Reserve Study in-between their “every x year” professional with-site-visit updates. It takes about 5-10 minutes, and it only requires the same skills that one would expect of someone adjusting the Operating Budget. See a quick video demo here.
Whether you hire a professional or perform your own update, Reserve Studies updates should be a cornerstone of every association’s annual budget process.