Rule of Thumb for Reserves

Started by NatalieF2 • 3 replies • 2035 views

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NatalieF2 (Illinois)
Posts: 6

Posted:

What's the rule of thumb for how much a community should have in reserves? We're a 12 unit single-building condo association, and before I bought my place, there was tuckpointing done that put us over budget for 2017, and the board did not make a special assessment to compensate for it. My guess is they pulled these funds from reserves, and I'm concerned that we aren't saving enough back in the reserves.

I'm just curious if there is a standard for how much should be in reserves.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Natalie,

There is no standard because each Association is different.
They have different responsibilities and different common elements.

To determine how much should be in an Associations Reserve fund, the Association needs to do a reserve study.

For more information on reserve studies see the following thread in this forum (some broken links in the earlier part of the thread have been fixed (if possible) in later posts on the thread):

http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/103517/view/topic/Default.aspx

AugustinD
Posts: 5,144

Posted:

Start by googling on the topic of {"Percent Funded" Reserve}. Then see the sites that come up like this one: https://www.reservestudy.com/what-exactly-is-percent-funded

BenA2 (Texas)
Posts: 1,273

Posted:

I would ask your board and/or manager if they have done a reserve study and how much they have in reserves.

The fact that they had the money to cover tuckpointing is an indication they are properly managing the finances. Special assessments are often a sign of poor financial planning.

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