A homeowner’s association should always operate with one eye on its long-term future. This means saving up money you need to cover future endeavors, such as potential large repairs or replacements, or brand-new amenities that benefit the entire community of residents.
A portion of the required HOA fees paid by all members every month should be set aside for these types of future expenses and ongoing upkeep to certain areas of the association. The amount that gets set aside can be determined by conducting a reserve study.
Here’s some information about reserve studies from an HOA management company in Chandler, AZ. Reach out to Tru-Star Management Solutions, LLC today for more information.
What is a reserve study?
A reserve study is a process (and resulting document) that allows HOA managers to project when certain components in the HOA will need to be replaced, how much that replacement will cost and how much the HOA must set aside every year to be able to pay for that upkeep when the time comes to do so.
Some examples of parts of the HOA that might need maintenance or replacement could include roofs, parking lots, tennis courts, fitness centers and swimming pools. Developing a reserve study requires the researcher to have an excellent knowledge of engineering, financial projection and investing. Many states require HOAs to perform reserve studies on a routine basis, but even if it is not the law in your area, it’s highly recommended to keep up with these studies, simply because it’s wise financial planning.
The HOA board members who are in charge of running the HOA itself have the power to make the final decision of how much money the association will set aside every year for the reserve fund. They must take this responsibility extremely seriously, and it is highly recommended they obtain a professional reserve study and abide by the recommendations included therein. This will help ensure the funds set aside are sufficient for future replacements versus arbitrary and provide fiscal confidence overall.
Who performs the reserve study?
In most cases, you’ll hire a reserve specialist to come in and perform the reserve study and property site inspection. Professionals in this area have extensive training and a keen knowledge of community infrastructure, assets and maintenance practices. You will want to contract a reserve expert with a proven track record. These professionals are held to high industry standards and have demonstrated an in-depth knowledge of community assets overall and can assist in providing an HOA with sound guidance.
If you’re interested in learning more about how HOAs can plan for their financial future and how you can go about hiring a reserve study professional, we encourage you to contact Tru-Star Management Solutions, LLC with any questions you have for our HOA management company in Chandler, AZ.