Escort—>Call GiRls In Mori Gate Delhi —>8447779280—Service Escorts In South D...
Common HOA Budgeting Mistakes for their Reserve Account
1. Reserve Study Presentation:
Common HOA Budgeting
Mistakes
Joel L. Tax, RS PRA
Reserve Specialist
jtax@reservedataanalyst.com
(866) 574-5115 ext. 704
2. 1. Inaccurate component list
2. Looking to the past to predict future projects
3. Ignoring inflation – assuming interest has a greater
positive impact
4. Not regularly increasing the reserve allocation amount
5. Doing Nothing!
Common Budgeting Mistakes
3. By far the #1 reason we see Clients struggling with
reserve budgeting is that they have an incomplete
component list.
1. Inaccurate Component List
4. If the component list and their associated costs are
not known then adequate budgeting is not
possible.
1. Inaccurate Component List
5. 2. Looking to the past to predict
future projects
Buildings do not age gracefully!
6. 2. Looking to the past to predict
future projects
What is seems to be random to a Client is often just
another day at the office for a knowledgeable
professional.
7. 3. Ignoring Inflation
• Inflation impacts total
cost of replacement
for all components.
• Interest earned only
impacts the actual
reserve account
balance.
• 3% compound
inflation equals a
doubling of costs
every 23.5 years!
Impact of
Inflation
9. 3. Ignoring Inflation - Offsetting
I D E A
• Offset the impacts of
inflation with regular annual
increases to the reserve
account allocation rate.
• This typically requires a
regular increase to the
allocation rate. Annual
increases are most fair to the
current and future members
of the community.
10. Annual increases are most fair to the
current and future members
4. Not regularly increasing the
reserve allocation rate
11. Every year the allocation rate does not
increase to offset inflation budgeting will
get more difficult.
4. Not regularly increasing the
reserve allocation rate
*Assumes $1,000,000 in component costs*
12. Ignoring an underfunded reserve
account has no impact on the outcome
as the project costs will still occur!
5. Doing Nothing!
13. Avoid These Common Mistakes
to Prevent Missing the Target
1. Creating an Inaccurate Component List – Hire qualified
professionals.
2. Looking to the past budget to predict future projections
– Buildings do not age gracefully – more of the building
will need to be replaced with age.
3. Ignoring inflation / assuming interest has a greater
impact - inflation impacts the total cost of all
components – interest is only earned on the amount
actually in the account.
4. Not regularly increasing the reserve allocation rate – the
budget needs to offset the significant impact of inflation
and regularly – annual increases are most fair.
5. Doing Nothing! Deterioration to common areas works
against a reserve budget 24/7 – 365 days a year.
14. Do you have
any questions?
???Joel L. Tax, RS PRA
Reserve Specialist
jtax@reservedataanalyst.com
(866) 574-5115 ext. 704