The weather has a big influence on how often an Association has to repair and replace things around the community. Things like snow, rain, and wind can cause damage to things like roofs, gutters, and paint.
Homeowners in many communities often wonder about the cost of future repairs and replacements to common areas, as well as how much money is set aside in reserves for such work. An up-to-date reserve study can provide answers to these questions and help community leaders plan for future projects.
In this guide, let’s take a look at reserve studies and how you can keep it up to date.
What Is A Reserve Study?
A reserve study is an analysis of the replacement needs of your common area assets. This is done by a professional who looks at the current condition of the assets and determines how long they will last and what it will cost to replace them. This is crucial in order to create a long-range funding plan for repairs and replacements.
The study also looks at how much money is currently in the community’s reserves, and how much money is needed to keep the reserves at their recommended level.
Why Update Your Reserve Study?
It is important to keep your reserve study up to date because the needs of your community can change over time. For example, if your community gets a new roof, the life expectancy of the roof will change, and the reserve study will need to be updated to reflect that.
If your community does not have a reserve study, or if it is more than 5 years old, you should consider getting one.
Here are two major benefits of updating your reserve study:
1) Calculates Future Costs Accurately
An updated reserve study will help your community budget for future repairs and replacement projects more accurately. This is because the study will take into account the current condition of your community’s assets, as well as any changes that have occurred since the last study was done.
Actual interest earned on reserve funds can vary from the projections in the reserve study. If reserve funds are earning more interest than projected, the reserves may be overfunded. Inflation can also affect construction costs, as changes in the prices of materials and labor can alter the local market rates. If there is an increase in demand for housing, this can also lead to an increase in construction costs.
2) Maintains Funding Correctly
If you are using an old reserve study to fund repairs and replacement projects, you may not be funding the projects accurately. This could lead to significant shortfalls in funding, which could leave the community with a large bill at a later date.
When you use an updated reserve study, you can be sure that the funding is maintained correctly. This will help you avoid shortfalls in funding, which could leave the community with a large bill at a later date.
If your community association is not using an updated reserve study, it is time to reconsider updating. By using an updated reserve study, you can be sure that your community is adequately funded for future repairs and replacement projects.
Update your reserve study now with California Builder Services. We offer California reserve study services to ensure that you are up to date on all the information you need. Get in touch with us today to get started.