You may be concerned that your community is running out of money, but can’t figure out why or perhaps you just need to figure out how to save money for that big community-wide project coming up. As a board member for your community, you have a lot of weight on your shoulders when it comes to properly managing your community's funds. By conducting a reserve study, you will not only find out how to make the money you're using more efficient, but also what great projects you can do with the money you'll save once the reserves are fully funded.
1. You need to save for that big project: (be it a roofing project or a brand new clubhouse for everyone to enjoy). According to Association Reserves, the adequate reserve contributions should be anywhere from 15% to 40% of your total budget. Maintaining proper contributions from year to year prevents future owners in your community from having to pay for the deterioration that occurred during your ownership in the community.
2. You need to proactively save: It may seem like delaying that sealcoating project a year or two could help you save for your reserves now, but waiting to do maintenance can result in projects that will cost ten-fold in the future. Think of it this way: sealcoating costs about $2,000 for a small project. If you don’t sealcoat your asphalt now, you could have to pay for the removal and replacement of the entire lot later on, which could cost you $20,000 for a small lot. Invest now, save later.
3. You need to increase your assessments but don't know by how much: Looking at what you have in your reserve study now compared to a year ago can be daunting, especially when you are not increasing the amount in your account or at least keeping it the same from year to year. This is the first sign that you need to increase yearly assessments or add a special assessment for a project. Conducting a reserve study can help you foresee which projects need to be done and how much you'll need to save until the upcoming project.
Neglecting to assess your current financial situation can cost your community big-time in the future. Conducting a reserve study can help you see exactly where mistakes are currently being made and where improvements can be made in the future. This will help the financial health of the community now and in the future, as well as making other residents more comfortable when or if an assessment increase comes up.
Have questions about a reserve study? Contact your Community Manager. If you are in need of Management Services, give Tolley Community Management a call at 770-517-1761. "Strength with a Personal Touch"
Post By: Sarah Scott
sarah@tolleycm.com
References:
So You Want a Reserve Study. Why? written by www.reservestudy.com
