What Makes a Good Reserve Study?
January 31, 2023 No Comments
Everyone wants a good Reserve Study. But what does that mean exactly? A complex process broken down into simple things to look for in a great Reserve Study.
Everyone wants a good Reserve Study. But what does that mean exactly? A complex process broken down into simple things to look for in a great Reserve Study.
Why does your Reserve Study include 3% inflation long term when CPI is > 8% and some Construction Indexes are using inflation rates of over 20%?
Association Reserves has prepared over 70,000 reserve studies across the nation, which means we’ve worked with a lot of managers! We’ve identified the top 5 things that we wish Managers knew when it comes to reserve studies and the reserve study process.
We were shocked, along with the rest of the world, by the collapse of our client property, Champlain Towers South Condominium Association, in Surfside, FL on June 24, 2021. Our hearts broke for the families and friends of the 98 people who lost their lives in this unprecedented disaster. Although the underlying causes of the tragedy have yet to be determined, we know, based on our March 2020 Reserve Study, that the towers were 40 years old and the Association was significantly “underfunded”.
If we make a reserve expenditure “on schedule” (i.e., according to our Reserve Study), why does our Reserve Fund Strength (Percent Funded) drop? That’s a great question because it illustrates the difference between the calculation of Reserve Fund strength and paying for reserve expenses.
Interest earnings bring income to the association that inflation takes away. But do they offset each other? Well first, it helps to understand the difference between the two.