With more people than ever living in HOA communities, planning for their future has never been more important. A reserve study is critical to understanding the physical condition of your HOA community and provides a guide to ensure the comfort and safety of owners.
As the majority of HOA communities do not have a reserve study(!), we are frequently asked, “What is a reserve study, and why should we pay for one?” In brief, a reserve study is a professional review of all aspects of infrastructure and a guideline to the cost of refurbishment and replacement of each component.
The reserve study provides critical context to enable owners to plan both the funding and work required so that they are not ‘emergencies’ when the time comes. While not every state requires these costs to be fully funded via reserve funds, there is an increasing focus on paying over time rather than needing to raise a special assessment for each major expenditure.
How much does a reserve study cost? A full reserve study, best done every 3-5 years, generally costs less than 1% of annual budget, and updates can be conducted in between if desired to capture changes in costs and any unusual deterioration.
What can you do to prepare yourself and your community?
- Watch relevant content on YouTube (for example, Robert Nordlund at Association Reserves has many informative and understandable videos: https://youtube.com/@reservestudies).
- Remember that a reserve study helps ensure the safety of your HOA and contributes towards value appreciation for owners.
- Run a free Eli Report (that’s us, app.elireport.com) which will pull what matters from meeting minutes, CC&Rs, budgets, insurance, and even reserve studies.
Your property is your asset, so protect it! Your reserve study will act as a planning guide for your HOA, empowering every owner with an understanding of what will need doing and when.