Reserve Study

What is the Purpose of a Reserve Study

A reserve study is a tool for budgeting.  Reserves funds are part of the budget.  A reserve study will help the association manage their long-lasting assets.

Part of the Budget

Each year an association puts together a budget.  Most of the budget consists of one-year-only expenses.  The remaining portion is for items that will last longer than one year.  Even though these items last longer than one year, they get annualized (or averaged) into a one year number in the budget. The more reserve items that an association has, the more complicated it becomes to figure out the reserve fund portion of the budget.  Reserves are estimated to make up between 15-40% of the association’s budget

Plan a Path Forward

A reserve study will also help an association get organized with respect to its reserve items.  All reserve studies will have the remaining life, useful life when new, and the current cost of each item.  Most reserve studies also show a year-by-year expense item schedule, which can be a very useful budgeting tool.

Establish a Detailed Funding Schedule of Assets

The bigger picture of a reserve study is to establish a funding schedule where all members pay their fair share to make the necessary repairs and replacements to its assets.  A reserve study should really zero in on the construction costs and life expectancies of the items.

Below you will find Fenwick Hills Homes Associations Reserve Study!

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