What To Do If You Can’t Afford Reserve Funding

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So you’ve just received your completed reserve study and flipped to the page showing your recommended reserve funding. You’re thinking there’s no way your association can afford that.. So what do you do now?

Sometimes the recommended reserve transfers can seem a bit out of reach. But remember, they just offset ongoing deterioration. All your common area projects are getting closer every month, and they’re going to be expensive. Integrating successful reserve funding is essential for the long-term financial health of your community. It helps you avoid being unprepared for major repairs and replacement expenses so you can quickly accomplish them while maximizing property values, safety, and owner enjoyment!

If your recommended reserve funding is beyond your budget, here’s a few steps you can take to make sure your association is taken care of:

1. Increasing Monthly Fees

Most commonly, the association fee structure hasn’t offset the cost of common area deterioration. The truth of the matter is that it’s time to increase the association’s monthly fees. It’s always unpopular, but the cost of deterioration is real, and not negotiable. The association needs to set an income stream that is sustainable, not doom the association to limp from one special assessment to another.


2. Special Assessment or Loan

If your association is in a true cash flow crisis, you’re faced with choosing between a special assessment or a loan. Special assessments are both painful and disruptive. You can learn more about the dangers of special assessments here. Similarly, loans have their own drawbacks also. If your association can qualify, you may be able to spread out the cost over a longer period of time, but the fees and interest make this more expensive for your owners in the long run. If you’re forced to make this challenging decision, click here to learn more about getting a loan or special assessment for your HOA projects.

The Conclusion: Why Reserve Funding Matters

Be proactive about reserve funding! It’s much easier to care for the association when the reserve fund has been gradually growing over the years as the components age. Then, the funds exist when the project needs to be accomplished. By addressing the financial reality and the issue now, you can prevent these big financial problems down the road.


Is a Reserve Study Right for You?

If you’d like to know how a reserve study can protect your association, please don’t hesitate to reach out to us and learn more about our reserve study services. We’re here to help you make the present less stressful and your association’s future more secure!