Reserve Data Analysis (RDA)

Started by JimM10 • 6 replies • 1625 views

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JimM10 (Arizona)
Posts: 48

Posted:

Does anyone have any idea what the cost of such a tool might be? This analysis (which was never done before) would cover project estimated costs for the coming (for example) five years and would cover everything from the pool gas grills to the sealing of the roadways within the compound. Is it essential for a projected 7 years.... or perhaps 5 years.

RickR3 (California)
Posts: 42

Posted:

Jim,

We have ours done by a third party, it costs us $500.00 per year. IMO that it is best to have 3rd party because there is no one on the board that knows all of the costs of upgrading, or replacing all the different items. I do know that our third party does not know computer or electronics aging or pricing and they were definetly off on our card key system. I work in that area so am very familar with that and when I received their draft I was able to correct them.

Rick Romack
HOA President.

JC3
Posts: 290

Posted:

A google search of that should bring up companies that do reserve studies. Perhaps by telling them basic information--size of community, numbers of owners, a pretty comprehensive list of items might get you a ballpark figure of estimated cost of a preliminary report of condition assessment, and whatever else they do.
Our list for instance, includes sidewalks, a small park and toddler play area, automatic sprinkler system for it, pavillion, signage, perimeter walls, several metal railings, types and sizes of retaining walls, etc.

JoeW1 (New York)
Posts: 728

Posted:

JimM10 - A Capital Reserve Replacement Analysis (CRRA) should be performed by an independent engineering firm hired by the Association Board(s). The Analysis will take the estimated useful life of an association element and the cost to replace that element. Inflation may or may not be factored into the replacement cost. It is then up to the Association Board to adopt a method to fund for those costs over time. Not just for the next 5 - 7 years, but forever until the associations no longer exist. A separate Reserve account is established and funds from maintenance fees are transferred into that account on a recurring basis. The sooner the Board starts transferring funds into the reserve account the better. Because the longer the Board and community waits, the less time they have to get the money and there is earned interest that is lost.

JimM10 (Arizona)
Posts: 48

Posted:

what do you mean $500 per year.. Doesn't your report cover at least a 5-year period?

LarryM3 (California)
Posts: 37

Posted:

Jim, Sure it will cover a 5 year period and longer BUT do you know what the cost of inflation will be in two years, three years and so on. No.
You need to constantly update your data on replacement. There are many factors that go into it. Bad weather can affect roads terribly in rough weather years and so on . Constant adjustments and updates need to be considered. If they have someone competent to do this yearly for $500.00 thats a great deal.
To many HOA's don't see the absolute neccessity of establishing a reserve early, they are more interested in keeping dues down.Then problems arrive and the assessments start. Lawsuits.
Larry

NancyD1 (Florida)
Posts: 447

Posted:

Jim,

A proper reserve should be calculated on a 30 year basis. This way you should not fall short and have to assess the homeowners.

A new development would be wise to reserve immediately. This way they will have accounts funded when they really need them. Not funding immediately is not saving for the future. If and when a new development starts to fund, it will be a lot more than if they had started the first year. They now have to make up the years that were missed to acculmulate the funds needed.

Giving a price for a reserve analysis is very hard. It is like the post "what do you pay for HOA fees". No two are comparable. Everyone has different common elements and different sizes of property. In this case size does count.

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