5 Important Things to Know Before Conducting your First HOA Reserve Study

Being a part of the homeowner association brings a lot of responsibilities and duties. The foremost responsibility is to take care of the assets and common property of the association. It includes maintenance, repair, and replacement of any component that wears, tears, breaks, or ages. That's where reserve studies can help you.

An HOA reserve study helps to evaluate the condition of the property and estimate how much money will be required for the maintenance or replacement of the component. But before jumping on to conducting this study right away, it is better to know a few things to be sure of what's going to happen.

Here are given a few important points you must know about a reserve study:

  • You Will Have to Spend Some Money

First thing you must know is that evaluating assets and property of the association will cost you some money. This isn't an easy task because it needs careful inspection of things to come up with a realistic time period and cost for repair or replacement. So, if you are preparing for an HOA reserve study, get ready to bring out some money. It can cost you more than $2000. But that money spent will be worth it in the end.

  • There are Two Steps of Reserve Studies

A reserve study is basically divided into two types: physical analysis and financial analysis. Things start with a physical analysis of things that involves inspecting the condition of the assets, their possible aging limit, and when they will require repairing work. This is a very detailed step that includes inspection of each and every common property of the association.

Once you know what type of repair work you might need in the future, the next step is to estimate the reserve funds required. The financial analysis tells how many funds you should collect and till what time so that you can carry out maintenance work on time and without running out of funds.

  • Not All Reserve Study Companies are the Same

Just like all lawyers having a degree in law are not equally eligible. Similarly, all reserve study companies claiming to be the best in the field don't give the same experience. So, make a wise decision while choosing your reserve study partner. Here are a few things you should check before hiring an HOA reserve study practitioner:

  • Knowledge of the work and experience

  • Quality assurance criteria

  • Workforce quality and inspection methodology

  • License or certificates to check their qualification and claims

  • Work ethics and accountability system

It's better to ask for the recommendation from other HOAs so that you can go with a tried and tested person instead of doing experiments on your own.

  • The Study Should Recommend Alternatives as well

The best reserve study takes an all engrossing approach to understand the condition of the common elements. Sometimes, the current material used in construction of the asset is not available during the maintenance or replacement time. And the alternative material available might be more costly than the previously used material. This can be a huge trouble at that time because it can land you in financial trouble due to exploding cost than already available funds. That's why a reserve study should also consider other alternative scenarios before giving a cost estimation to save from any possible trouble.

  • A Reserve Study Should be Updated

Things don't end once you conduct a reserve study. It's a matter of people's wellbeing, so a reserve study should be updated at considerable intervals. Some states' laws have given a particular time within which an association must conduct a reserve study no matter if the maintenance activity estimated during the first study has been conducted or not.

Remember that we are talking here about structures, assets, and property that are prone to weathering, unforeseen damages, and other issues. So, we can't predict if the condition of an element estimated two years ago will deteriorate the same way or not as per the estimation. That's why it's important to update a reserve study to keep things under control and check.

Conclusion

A reserve study is just a tentative estimation of the condition of the common elements of an association and funds required to keep those elements intact. Things can definitely go up and down from the estimation on the run time. But the study gives you a broader picture of the possible situations, helps to keep things under control financially, and guides you to make a better investment. So, if you are a part of an association, it is time that you should start considering conducting a reserve study to keep your association thriving safely.