Certain expensive common home elements must be replaced every 10, 15, or 20 years.
Part of preparing the budget includes calculating how much money the homeowners association must set aside each year so the funds are available when the concrete or hot water heaters need to be replaced. To make sure estimates are as accurate as possible, reserve specialists are often times brought in to help.
The reserve specialist will prepare a study that will provide the board with guidance on how to keep our association’s physical assets from deteriorating faster than our financial assets increase.
The reserve specialist chosen by the board has the expertise and experience to accurately determine the life cycles of our common components and will help the board estimate the cost to repair or replace them.
The reserve specialist will visit the community to inspect it and prepare a written reserve study for the association. That report will include an inventory of all common area items, recommendations on what needs to be replaced and when, what the replacements will cost and a plan for paying for them.
The reserve specialist is also an expert at analyzing the financial resources needed to maintain the common elements over time and will advise the board how to balance the size of the reserve fund against the deterioration of the common elements.
Since the community’s physical assets are constantly decaying, the guidance of a reserve specialist will help the board protect those assets and keep the community looking its best at all times—and that helps protect our property values!