Members of the HOA Board have a fiduciary responsibility—an obligation to ensure the financial stability of the Association. One of the many tools available to HOA Board members is the reserve study, which allows them to take a snapshot of the community’s financial health. For many Board members, however, the HOA reserve study can be daunting. In a new statement to the press, Kuester Management Group provides some tips on properly leveraging this important tool.
“The first step is just making sure you know what the reserve study is,” comments Bryan Kuester, President of Kuester Management Group. “Basically, it’s a list of all your common assets—roads, park areas, roofs, the swimming pool, the tennis court, and so on. The reserve study matches these items to the cost associated with their maintenance, replacement, or repair—ensuring that your HOA is setting aside the proper funding to keep all common areas in top condition.”
The first step in interpreting a reserve study, Kuester says, is simply confirming that it lists all the right elements. “Make sure your reserve study does indeed list all common assets, and that nothing’s been left off,” Kuester observes.
From there, simple calculations can provide a ballpark estimate of how much the HOA should be saving. “Say your reserve study tells you that it will cost X amount of dollars to replace the roofs, and that roof replacement will be needed in about 10 years,” Kuester says. “Divide X by 10 and you’ll see about how much money you need to be contributing to the reserve fund each year. Compare that number against the real-life figure and see how your HOA is doing!”
Of course, this is a simplified approach. “For one thing, you’ll need to adjust for inflation,” Kuester comments. For a deeper dive into reserve study findings, he recommends consulting with a reserve study specialist. “Contact us at Kuester Management Group to ask about our community management services, which include reserve study analysis,” he concludes.
More information about the HOA management services offered by Kuester Management Group can be found online at www.kuester.com.
Kuester Management Group, a division of Kuester Companies, works to protect property values and enhance the quality of life in each of its managed communities. Providing a full range of association management services, Kuester Management Group has worked to foster strong, resilient, and unified communities across North and South Carolina. The company is proud to offer on-site property managers, all zealous for building strong communities meant to stand the test of time. Other key services include document keeping, financial oversight, and other critical back-end functions.
More information is available at www.kuester.com or @KuesterCompany.