Reserve Study Basics
•Download as PPTX, PDF•
2 likes•1,867 views
A brief overview of what a reserve study is and the process that professional reserve study providers follow.
Recommended
More Related Content
What's hot
What's hot (20)
Similar to Reserve Study Basics
Similar to Reserve Study Basics (20)
More from Joel Tax
Recently uploaded
Recently uploaded (20)
Reserve Study Basics
- 1. An Overview of Reserve Studies Reserve Data Analysis est. 1983 www.rdanorthwest.com
- 2. About Reserve Data Analysis Since 1983 we have provided thousands of thorough and well thought out catered reserve studies.
- 3. Reserve Study Topics 2 3 Brief History of Reserve Studies in WA1 What is a Reserve Study? The Reserve Study Process
- 4. Brief History Vocabulary Funding Concepts Disclosures Report Contents In 1998 the Community Association Institute (CAI) developed National Reserve Study Standards. These were developed to standardize:
- 5. Washington State Statutes - 2012 Washington State Condominium and Homeowner’s Associations with significant assets, defined within RCW 64.34.020(38) and RCW 64.38.010 (19), are required to conduct and disclose Reserve Study results annually. At minimum every three years, the Reserve Study update must be based upon a visual site inspection by an independent Reserve Study Professional. Washington RCW also clearly state what the minimum requirements are for reserve study contents including several required funding strategies.
- 6. Reserve Study – A Multi Purpose Tool Management • Timeline • Prepare Community • Obtain Bids Bid Verification • Accurate Measurements • Verify Costs • Negotiations Marketing • Buyer Confidence • Financial Strategy • Values Up Budgeting • Be Prepared • Fairly Assess • Minimize Dues Financial • Association Loan • FHA, Fannie / Freddie Mac • Buyer Loans Disclosure • WA RCW • Community Goals • No Surprises
- 7. Process - The Reserve Study Step 1 Step 2 Step 4 Step 3 Component Analysis Financial Analysis Develop Funding Strategy Completed Reserve Study Developing a reserve study report requires numerous important steps.
- 8. Step 1 - Component Analysis Association Responsibility Limited Useful Life Predictable Remaining Life Above Minimum Cost Does the component meets the four part test outlined in National Reserve Study Standards (CAI).
- 9. Step 1 - Component Analysis Quantify Useful Life Remaining Useful Life Current Replacement Cost Component List Fully Developed
- 10. Step 1 - Sample Component List
- 11. Step 2 - Financial Analysis Forecasting • Determine Future Costs • Determine Future Replacement Cycles Review Accounts • Review Reserve Account Balance(s) • Review Reserve Account Allocation Rates • Assessments, Loans, High Rate of Delinquent Dues, Etc. Financial Strength • Determine Current & Future Reserve Fund Strength (Percent Funded) • Is it adequate? Is it in line with the Association’s risk tolerance?
- 12. Step 2 – Financial Analysis – Future Costs
- 13. Step 3 – Funding Strategy Sufficient Cash Stable Contribution Rate Evenly Distributed Fiscally Responsible Does the financial strategy follow the four basic principles outlined in National Reserve Study Standards (CAI).
- 14. Step 3 – Funding Strategy Fairness to current & future members Reserve allocation is to offset current deterioration of components, it’s not for future expenses. Liability – we cannot leave out items that clearly should be included. The Board can decide to not fund for them but we need to include. We need to follow Washington State RCW requirements for Reserve Studies There are important concepts that a reserve study professional must take into consideration when developing a funding strategy.
- 15. Step 3 – Funding Strategy There are many funding strategies to consider but typically only a couple will be appropriate for any particular Association.
- 16. The Completed Reserve Study 1. Recommendations 2. Expense Timelines Condition Assessments4. Thorough Inventory
- 17. Step 4 – Completed Reserve Study
- 18. Recap – The Process • Current cost • Condition assessments Component List • Determine future cost & future replacement cycles. • Determine financial strength. Financial Analysis • What funding method best matches the goals of the Association? • What is the most fair and in the best interest of the community membership? Funding Strategy
- 19. Do you have any questions? ??