Reserve Study, Condo & Homeowners

A Reserve Study is a financial planning tool that takes into account future projected capital expenses such as roof replacement, paint, paving & sealing etc.

Excel spreadsheets are used to display the input parameters such as replacement cost per item, the estimated useful life the remaning useful life.

The 2nd half of the analysis shows the reader how much money must be put aside in a reserve fund to pay for these future expenses.  The infomation is diplayed in both dollar sums per year and by graphs that show the "percent funded" at various points in time based on beginning account balances & amount put aside per year.

There are different types of Reserve Studies, some are called "SIRS" or Structural Integrity Reserve Study, the other type is a "Traditional Reserve Study".  Only certain buildings with age and height requirements are required to have a SIRS completed by December 2024.

Reserve Studies have traditionally employed two types of funding. "Straight line funding" ignores inflation and interest earned on deposited funds.  "Pooled Reserves" involves pooled cash flow funding over (30) years based on inflated cost over time and interest earned on deposited funds.  CFAC's Reserve Studies are based on the "Pooled Reserves" only type of funding.  We believe that "Straight-line" funding produces a misleading result and do not include projections based on this funding method.  

Florida law does not require community associations to have or to maintain a Traditional Reserve Study but experts agrees that a Reserve Study will reduce the chance of a need for a "Special Assessment".  Special Assessments are required when the community associations reserve fund is insufficent to pay for the cost of a required capital expense of say, a roof replacement.  Various professionals are allowed to perform reserve studies and licensed commercial real estate appraisers fall into a group called "financial experts" and are therefore approved. 

Lastly, it is clearly in the interest of all parties involved in the management of community associations & those with an ownership interest in a community association to have a Reserve Study on hand.

The graphs below are part of every Reserve Study and illustrate cash flow in and out.





This is one of several tables, notice Year 16 is when the fund is in the "Green Zone"


CFAC or Central Florida Appraisal Consultants is an Orlando-based consulting firm that's been in business since 1994.  Daniel Peele is a State Certified General Real Estate Appraiser, RZ 884 and a Business Member of the Community Associations Institute (CAI), Orlando Chapter.  







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