Reserve Fund Process
A Reserve Fund Study is a long-term financial planning tool designed to help condominium corporations, stratas, HOAs, and other property-owning entities plan and prepare for future major repairs and replacements of common elements. The study ensures that adequate funding will be available when these capital expenditures are due, minimizing the risk of special assessments or financial shortfalls.
Fundamentals of a Reserve Fund Study
Component Inventory
Identify all major common elements (e.g., roofs, siding, windows, HVAC systems, elevators) that will require repair or replacement over time.
Cost Estimating
Identify all major common elements (e.g., roofs, siding, windows, HVAC systems, elevators) that will require repair or replacement over time.
Condition Assessment
Determine the current state, estimated useful life, and remaining life of each component.
Financial Modeling
Analyze the current reserve fund balance, annual contributions, and projected expenditures to create funding models.
Funding Plan
Recommend a sustainable funding strategy that ensures the reserve fund remains healthy over the long term while minimizing financial stress on owners.
The Reserve Fund Study Process
Site Inspection:
A qualified professional (typically a licensed engineer) conducts a detailed visual inspection of the property to assess the condition of all major components.
Data Collection & Analysis:
All findings from the inspection are documented. Past maintenance records, budgets, and reserve fund balances are reviewed to establish a baseline.
Financial Assessment:
Using industry-standard methods, engineers project future replacement costs and analyze reserve fund adequacy under various funding scenarios (e.g., baseline, conservative, aggressive).
Report Preparation:
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Executive summary
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Component inventory
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Detailed funding forecasts
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Recommended contribution schedules
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Clear visuals and tables
Levels of Service for Reserve Study
Level 1: Full Reserve Study
Comprehensive on-site evaluation and financial analysis. We’ll need to speak with your management and maintenance staff, conduct counts, take measurements, make observations, assess the condition of your components, and create a photo inventory. The final phase of work includes computing your Reserve Fund Strength, crafting a custom Funding Plan, and creating your Reserve Study deliverables.
Level 3: Update Without Site Visit
Update of a prior report that is performed annually in the years between site visit studies. Because there is no on-site inspection involved, it is our least expensive level of service.
Level 2: Update With Site Visit
Update component list (ie. Useful life, remaining life, replacement costs, economic assumptions, etc) and refresh existing study with on-site inspections
