Every community association has three functions – to serve as a business, a government and a community. Community associations are generally nonprofit corporations, functioning in many ways as businesses with revenues (association dues, clubhouse rentals, revenues from golf course or restaurant, etc.) and expenses. As a business, the Board needs a business plan for the […]
Service Life of Building Components
The standard reference for service life of building components such as HVAC systems, Plumbing, air handlers, Digital Controls, and elevators, etc. may come from many different reference books whose authors have deduced, observed, or tested a sample of similar components to produce a “mean” service life. It is unlikely that any single author has lived […]
5 Questions About Reserve Fund Studies
The Reserve Study is one of the most important documents that a shared asset community can own. Coengineers, PLLC complies with the more stringent standard of the Canadian Reserve Study Act combined with the ASTM E2018-08 standard for building condition assessments where practical. This standard of care provides the Board, The Management Company, and the […]
Reserve Funding for On-Site Managed Communities
Increasingly reserve funding has become more and more important in validating the community association operations and their management. All on-site managed communities whether they are Luxury Condominiums, Large-Scale On-site Managed Communities or Active Adult communities should have reserve funds with suitable reserve studies backing the funding levels. On-site managers are trained to be aware of […]
Reserve Funds: Do You Know How Much Your HOA Needs?
Funding community operations is one of the most important functions of an HOA board. Typically, there are two types of funds in your HOA – operating funds and reserve funds. Operating funds are used to take care of day-to-day operations. Examples of operating funds might be contracted services (gate, fence, lighting, security, etc.), utility expenses, […]
What is a Reserve Study in Your HOA?
The Reserve Study analyzes repair and replacement needs like roofing and painting that happen every year and provides a funding plan for accumulating money to perform this work when its needed. It is more a budgeting function than a construction or building analysis, although there is an element of that. The study is usually based […]
Coming back from reserve fund shortfalls: Why the account might dip below adequate levels, and ways to replenish it
In an ideal world, condominium owners are satisfied with the way their corporation is run, fees are comparable to the condominium down the street, major repair and replacement projects are well-managed, and the reserve fund maintains a healthy balance. Then again, in a perfect world, condos never leak! The unfortunate reality is that many corporations […]
Real Estate Condo associations should build up reserves for a rainy day
A recent front page article in The Washington Post on the financial problems many aging condominiums in the Washington area are facing prompted me to write this column about the absolute necessity of maintaining adequate reserves. Boards of directors can’t control when personal financial problems force owners into default and foreclosure, reducing the condo’s source […]
What is a Reserve Study and Why Should an HOA Board Care?
As a homeowner or renter in a homeowners association, you know the importance of setting aside a little bit of money each month in case of an emergency. After all, you never know when you might have to replace an appliance or take your car to the mechanic. In order to effectively do this you’ve […]
What Successful Associations Do: Master the Reserve Study
Believe it or not, budget season is upon us again. Each association requires different levels of involvement from their board during the budgeting process. While a professional community association manager will assist you when you’re getting started, it’s important for boards to make sure the manager understands the community’s long-term vision by sharing any future […]
The Role and Importance of the Reserve Study in Determining an Appropriate Reserve Fund
A well-run condominium can be thought of as having two components: (1) physical assets, which are the buildings, structures, and grounds on which the condominium is located; and (2) financial assets, which are the funds necessary to maintain the condominium’s physical assets. So long as the financial assets are adequate to meet the maintenance needs […]
Communities That Lack Reserve Fund Studies Face Uncertain Futures
In my last article I shared my disbelief that there isn’t a law requiring property owners associations to conduct reserve fund studies. Managing an association without a reserve fund study is akin to flying a plane without instruments, piloting a boat without a rudder, or driving a car with no brakes. Read the article…………
Read Your Reserve Study, Then Look Down
At a recent conference/expo I asked all of the reserve study companies if they had begun to include the things that are not obvious, in their studies. Most said ‘no’, but they would try to help an association if they were asked. By “not obvious”, I mean those items that are underground, or inside of […]
Reserve Planning in Your HOA: Yield, Safety & Liquidity
In recent years, reserve planning has become a long overdue reality for many older homeowner associations. The boom and bust mentality of deferred maintenance and special assessments has finally been replaced with proper long range planning and funding. For all of them, that meant accumulation of hundreds of thousands of dollars and for some, millions. […]
The HOA’s Reserve Study
A Reserve Study is an essential part of running a homeowner association. It provides the board with a systematic way to schedule the repair and replacement of common elements and a fair way to distribute the costs of those events to all the members who benefit from them over the thirty year time line. A […]
Capital Improvements vs. Reserve Fund Expenses
Capital improvements are projects where a new asset is added to the community. It is a project that, once installed, will then create operating expenses and future reserve expenses. A good example of a capital improvement type expense would be the installation of tennis courts when they do not already exist. Read more…………
Do Water Lines Belong in a Reserve Study?
When deciding whether a common area item belongs in a reserve study, refer to The National Reserve Study Standard four-part test: Is this item Association responsibility? Does this item have a limited Useful Life Expectancy? Does this item have a predictable Remaining Useful Life? Is the cost above a minimum threshold? Read more…….
Saving for That Rainy Day: Reserve Funding for Your Condo Projects
These days, just about everyone is cutting back on spending, either to make ends meet, saving for something special or a rainy day, paying off debt or funding their retirement. Consumers are cutting coupons, looking for deals and keeping a close eye on their dollars. Whenever costs or fees go up and consumers have to […]
Boards – Take Notice – 3 big reasons properly funded reserves are essential
Only a few years ago the Virginia General Assembly recognized that many association boards just would not face up to the need for reserves in an effort to keep “dues” at a lower and more competitive level. Many are paying a price for those decisions now. It became such a problem that several years ago […]
Live Long and Prosper – Life Spans of Building Systems
Nothing lasts forever, and though you can’t predict the moment a piece of building equipment will break down, you can prepare for it. Even the toughest boiler, HVAC unit, or elevator will eventually tucker out and need major repairs, or just give up the ghost and have to be replaced. And with New England’s penchant […]
Live Long and Prosper: Life Spans of Building Systems
Nothing lasts forever, and though you can’t predict the moment a piece of building equipment will break down, you can prepare for it. Even the toughest boiler, HVAC unit, or elevator will eventually tucker out and need major repairs, or just give up the ghost and have to be replaced. Read more…….
Property Managers and Financial Education
I recently interviewed with a local HOA seeking to replace their present property management. One of the questions I was asked was “Why does it matter that a property manager have a background in finance and/or economics?” My response was to take their financials which I had received copies of and use it as an […]
There’s a reason for long-term planning –
….because not thinking about it usually leads to problems, or even a disaster. Utility costs are going to continue to go up, so why not plan for converting the high cost items to energy and cost savings items. Now is not a bad time as there are grants floating around to help. One association in […]