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What are the 3 most important figures in a reserve study?

A reserve study is a blueprint for the future. It is a tool that enables an association to anticipate and prepare for maintenance, repair, and replacement expenses. There are three key pieces of information that a reserve study provides that associations can take advantage of:

  1. The Component List. What are you actually saving for? .. what are the expenses do you anticipate to face? The component list should read like a play by play checklist of anticipated maintenance and replacement projects that face your association, laying out the roadmap for the future.
  2. Percent Funded. Once you have defined and understand what you are saving for (the Component List), you need to know you current situation and whether you are on track to to meeting your obligations. More specifically, are you putting enough money into reserves and do you have enough reserves in the bank for the age of the community.
  3. The Funding Range. After establishing where you stand financially, you need to look at the options you have moving forward. How much should you be putting into your reserve account? Knowing the contribution ‘range’ helps you contribute between the lowest expectation (Baseline Funding) and the highest/ideal level (Full Funding), avoiding under or over-funding your reserve account.
Published on June 8, 2020