How to Read A Reserve Study in 3-Steps

How to Read A Reserve Study in 3-Steps

Welcome to our in-depth guide on Reserve Studies, designed to be your go-to resource for understanding the intricacies of financial planning for your community. Whether you’re a board member, property manager, or a homeowner, this guide will provide valuable insights into navigating the complexities of Reserve Studies.

Unlocking the Power of Reserve Studies

Reserve Studies act as a vital “Road Map” for associations, guiding them through the uncertainties of the future. To make this roadmap more accessible, follow these three key steps:

1. Decoding Percent Funded Levels

Understanding the percent funded level is crucial for assessing your association’s financial health. Remember, this percentage fluctuates over time, making the 100% funded level a dynamic target. Here’s a quick guide: 70% and above is “Strong,” 30%-70% is “Fair,” and 0%-30% is considered “Poor.” Don’t stumble over the numbers; instead, use them as a starting point for your financial journey.

2. Navigating the Asset Inventory

Dive into the Asset Inventory section, a treasure trove of details about your community. Each page lists crucial information such as location, condition, age, and replacement cost for each asset. Treat this as a powerful planning and budgeting tool, enabling your association to make informed decisions for the future.

3. Acknowledging the Shelf Life of Your Reserve Study

Just like your operational budget, Reserve Studies have a shelf life. Changing economic trends, labor costs, and material prices can impact their accuracy. Ensure your Reserve Study stays relevant by having it reviewed annually by a credentialed specialist, with an on-site visit every three years.

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