Reserve Study Software

KurtW1 (Massachusetts)
Posts: 9

Posted:

My Association is considering purchasing software for doing reserve analysis.

Interested to hear which products are out there, and, in particular, software which also includes databases that have replacement cost estimates for common components.

Recommendations/reviews by current customers would be great.

Thanks very much.

Kurt

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By KurtW1 on 06/15/2022 2:14 PM
My Association is considering purchasing software for doing reserve analysis.

Interested to hear which products are out there, and, in particular, software which also includes databases that have replacement cost estimates for common components.

Recommendations/reviews by current customers would be great.

Thanks very much.

Kurt

Kurt, discussing specific product names is forbidden on this forum, but there are two or three decent options. I'm happy to send those to you if you'd like to email me: [email protected].

MarkR21 (North Carolina)
Posts: 710

Posted:

There is a free website that calculates some basic stuff. If you have a ton of amenities then that’s a different matter. How much are your assets valued at?

MichaelT21 (Arkansas)
Posts: 501

Posted:

A reserve study is cheap. We just signed a contract for a reserve study without site visit for $640. I cannot imagine why I would spend my personal time creating my own reserve study rather than paying for a professional, 3rd party reserve study.

Part of the reserve study is to justify setting money into reserves to the homeowners and I am not sure a DIY reserve study would be as convincing as an independent reserve study.

MarkM19 (Texas)
Posts: 1,459

Posted:

Kurt,
Some things are Always best left to the professionals. IMO reserve studies should be one of them. They already have the software, and the life expectancy tables that makes for easy work for them. If you are your board tries to do this on your own and leave something or underestimate values, it will become your issue. What happens if the people that are elected in the future do not have the ability to keep your in house software going? Board members are not elected for life.

Studies are usually done every 3 years. The start with a very detailed review and some want to come out and do a minor report in the off years.

JeffT2 (Iowa)
Posts: 880

Posted:

Quote:

Posted By KurtW1 on 06/15/2022 2:14 PM
Interested to hear which products are out there, and, in particular, software which also includes databases that have replacement cost estimates for common components.

Well, this is not software, but a free, useful resource is The Operating Cost Manual for Homeowners Associations, which has about five pages of common reserve costs with average life, for components such as roofing, painting, paving, swimming pools, and a number of others. See the section on reserves starting on page 21.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By MichaelT21 on 06/16/2022 9:07 AM
A reserve study is cheap. We just signed a contract for a reserve study without site visit for $640. ... snip ...

That may work for HOAs without assets like a clubhouse and for HOAs with board members who have the knowledge to estimate remaining useful life. But for condos, how would you do that without getting on the roofs or inspecting the buildings' wrapping?

Putting together a reserve study using a spreadsheet works just fine as far as the mechanics go. But what you're really paying for is knowledge that the board may not have have. Unless your software provides that, you may be fooling yourself.

(One way to save money is by shopping around and sticking with a reputable company. Once they've done the full study, you can just have periodic updates which cost a lot less.)

MichaelT21 (Arkansas)
Posts: 501

Posted:

Quote:

Posted By CathyA3 on 06/16/2022 10:42 AM

Posted By MichaelT21 on 06/16/2022 9:07 AM
A reserve study is cheap. We just signed a contract for a reserve study without site visit for $640. ... snip ...

That may work for HOAs without assets like a clubhouse and for HOAs with board members who have the knowledge to estimate remaining useful life. But for condos, how would you do that without getting on the roofs or inspecting the buildings' wrapping?

Putting together a reserve study using a spreadsheet works just fine as far as the mechanics go. But what you're really paying for is knowledge that the board may not have have. Unless your software provides that, you may be fooling yourself.

(One way to save money is by shopping around and sticking with a reputable company. Once they've done the full study, you can just have periodic updates which cost a lot less.)

My argument is not on site versus no site visit. We do a on site visit every 3 years. I'm just saying that no site visit professional reserve study is better than a DIY reserve study.

KerryL1 (California)
Posts: 14,550

Posted:

Is your HOA detached homes, Kurt? Whether or not, do you have a lot of amenities that'll need to to repaired/replaced? If condos, I'll reply differently. How old is your HOA? Do you have an existing reserve study?

With others, let a pro do the first one with an on-site visit. Savvy certified reserve analysts or specialists will know the effects of climate in your particular area on the estimated life of components exposed to the elements. They also will better know if certain brands/products have longer estimated lives than others, say pool pumps or roofs. I don't think a DIY will have this "local knowledge."

A reason that MichaelT's study is so cheap is that the only common areas they have are parks, and I think some playground equipment.

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By MichaelT21 on 06/16/2022 11:44 AM

Posted By CathyA3 on 06/16/2022 10:42 AM

Posted By MichaelT21 on 06/16/2022 9:07 AM
A reserve study is cheap. We just signed a contract for a reserve study without site visit for $640. ... snip ...

That may work for HOAs without assets like a clubhouse and for HOAs with board members who have the knowledge to estimate remaining useful life. But for condos, how would you do that without getting on the roofs or inspecting the buildings' wrapping?

Putting together a reserve study using a spreadsheet works just fine as far as the mechanics go. But what you're really paying for is knowledge that the board may not have have. Unless your software provides that, you may be fooling yourself.

(One way to save money is by shopping around and sticking with a reputable company. Once they've done the full study, you can just have periodic updates which cost a lot less.)

My argument is not on site versus no site visit. We do a on site visit every 3 years. I'm just saying that no site visit professional reserve study is better than a DIY reserve study.

What all of this fails to acknowledge is that "professional" reserve studies are mediocre at best without a lot of extra work put in by someone. That someone is often a volunteer homeowner leader. https://www.(LINK-NOT-ALLOWED-PER-POSTING-RULES)/resources/reserves

Reserve Studies with Volunteer Help

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By SteveH35 on 06/16/2022 12:29 PM

... snip ...
What all of this fails to acknowledge is that "professional" reserve studies are mediocre at best without a lot of extra work put in by someone. That someone is often a volunteer homeowner leader.

Citation, please. That has not been my experience, and I expect such a generalization ignores the variability of communities needing these studies and that of the work produced by the professionals.

One could point out that if a particular HOA has a choice between a "mediocre" professional study and a study conducted by their board members who lack the necessary knowledge and skills, the "mediocre" study will almost certainly yield better results.

One should also keep in mind that reserve studies are at best an educated guess, and the quality of the result will vary with the quality of the inputs and the skill of those using those inputs. They are not, however, a crystal ball, nor do they account for the unexpected. Studies done over a year ago used estimated inflation rates and projected increases in the cost of building supplies that are wildly over-optimistic given current realities.

If board members feel that they have the skills to accurately estimate remaining useful life of the components the HOA is responsible for and to make accurate economic projections, then by all means they should save the HOA's money and handle this themselves. But they should do so with an accurate view of what's involved (and after making sure they're carrying enough insurance to cover board members climbing on ladders and inspecting roofs).

MichaelT21 (Arkansas)
Posts: 501

Posted:

The only work I have to do as a volunteer, when we hire a professional company, is provide PDFs of all completed invoices for work that was done in the past year that relates to reserve studies, and any proposals for potential work that we are contemplating that relates to reserve items. Likely, our PM could do all of this for us without my help, but it's easier for me to do it and I have the records readily available.

The initial reserve study would take a lot of volunteer time to get the reserve assets in a community correct (the reserve company will make an educated guess but one who lives in the neighborhood and knows the reserve assets well will help a lot) but once the initial reserve study is complete, it takes little effort to keep it up to date.

I do not try to guess at the length of time that our reserve assets will last. I provide the installation dates and the reserve company estimates the life. That's their job.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I asked the company that did our last study to provide in the info in an electronic spreadsheet.

We have a list of each asset, construction date, projected year of replacement, and projected cost of replacement. A second sheet is sorted by year, and I also added a few columns where I track our reserve accounts, maturity dates if any, annual income from reserves, estimated inflation rate, and the like - it makes it easy to see how long we can tie up money in CDs, for example, so that we have the dollars we need when we need them.

Any reasonably competent board member can put together a list of assets, even if it's a pretty long list. But estimating remaining useful life and projecting future replacement costs are the heart and soul of a reserve study.

People who believe that boards should be able to do the reserve study are essentially stating that they believe that the board is competent to handle the estimates and projections. If so, good for them - I can see that it's possible in some HOAs with minimal reservable assets.

But in communities with significant assets (condos, for example), that will almost certainly be beyond the skills of most boards - and that's not a poor reflection on the boards. People in community associations are joint owners of a corporation with assets that can easily add up to 7 figures and beyond - they have to expect that there will be costs associated with maintaining those assets and that the work should be in the hands of people who know what they're doing.

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By CathyA3 on 06/16/2022 1:20 PM

Posted By SteveH35 on 06/16/2022 12:29 PM

... snip ...
What all of this fails to acknowledge is that "professional" reserve studies are mediocre at best without a lot of extra work put in by someone. That someone is often a volunteer homeowner leader.

Citation, please. That has not been my experience, and I expect such a generalization ignores the variability of communities needing these studies and that of the work produced by the professionals.

One could point out that if a particular HOA has a choice between a "mediocre" professional study and a study conducted by their board members who lack the necessary knowledge and skills, the "mediocre" study will almost certainly yield better results.

One should also keep in mind that reserve studies are at best an educated guess, and the quality of the result will vary with the quality of the inputs and the skill of those using those inputs. They are not, however, a crystal ball, nor do they account for the unexpected. Studies done over a year ago used estimated inflation rates and projected increases in the cost of building supplies that are wildly over-optimistic given current realities.

If board members feel that they have the skills to accurately estimate remaining useful life of the components the HOA is responsible for and to make accurate economic projections, then by all means they should save the HOA's money and handle this themselves. But they should do so with an accurate view of what's involved (and after making sure they're carrying enough insurance to cover board members climbing on ladders and inspecting roofs).

The quality of your reserve study is directly tied to having tuned in people who care get involved.

I do so wish I could embed the image, but it isn't hosted in a standard way, so that won't work. See View this reference.

The opinion that "the only work I have to do as a volunteer is to hire company X" is simply dead wrong. Despite paying six figures for an on-site building manager, paying separately for the services of a CAM and paying a reserve study vendor, components get missed, cost estimates are completely disconnected from reality and expected useful life is often way out of line UNTIL people who care get involved. That usually means volunteer homeowner leaders. You don't have to believe me. The latest survey data indicate that 60% of CICs have volunteers involved with their reserve study to a greater extent than selecting a firm and approving a result.

Regards,
Steve

KerryL1 (California)
Posts: 14,550

Posted:

With Cathy. I don't buy into Steve's assertions entirely either. VERY few owners, let alone board members, know the repair or replacement cost of many reserve components. We have about 100 reserve components in our high rises and many are mechanical/plumbing items, e.g. elevators, roof top cooling towers (HVAC system); huge valves, reheaters for hot water.

Even with detached homes, if they have a lot of amenities, no individual or a handful of owners will know the estimated useful life of certain replacement or repaired components. I can see where one owner/director may know a lot about swimming pools and their pumps/motors, but she most likely won't know about roofs.

In our high rise HOA, the building engineer accompanies the reserve analyst during the onsite visits every 3 years. The PM also meets with the analyst. Some directors do too, but the only one one who knew much about many components was me because of having served a long time and during construction defect legislation.

MarkM19 (Texas)
Posts: 1,459

Posted:

Kerry,
Can you imagine if the Tower in South Florida had said that we used our own Software to make Reserve Study decisions? The next thing they would say is it was Betty, Bob, Joan, Joe and Mark that made that study.

Some things are done a certain way for specific reasons. HOAs have many ways to save money without learning to do other people's jobs.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By KerryL1 on 06/17/2022 10:18 AM
With Cathy. I don't buy into Steve's assertions entirely either. VERY few owners, let alone board members, know the repair or replacement cost of many reserve components. We have about 100 reserve components in our high rises and many are mechanical/plumbing items, e.g. elevators, roof top cooling towers (HVAC system); huge valves, reheaters for hot water.

Even with detached homes, if they have a lot of amenities, no individual or a handful of owners will know the estimated useful life of certain replacement or repaired components. I can see where one owner/director may know a lot about swimming pools and their pumps/motors, but she most likely won't know about roofs.

In our high rise HOA, the building engineer accompanies the reserve analyst during the onsite visits every 3 years. The PM also meets with the analyst. Some directors do too, but the only one one who knew much about many components was me because of having served a long time and during construction defect legislation.

Actually there is a book that is available that provides that information.

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By KerryL1 on 06/17/2022 10:18 AM
With Cathy. I don't buy into Steve's assertions entirely either. VERY few owners, let alone board members, know the repair or replacement cost of many reserve components. We have about 100 reserve components in our high rises and many are mechanical/plumbing items, e.g. elevators, roof top cooling towers (HVAC system); huge valves, reheaters for hot water.

Even with detached homes, if they have a lot of amenities, no individual or a handful of owners will know the estimated useful life of certain replacement or repaired components. I can see where one owner/director may know a lot about swimming pools and their pumps/motors, but she most likely won't know about roofs.

In our high rise HOA, the building engineer accompanies the reserve analyst during the onsite visits every 3 years. The PM also meets with the analyst. Some directors do too, but the only one one who knew much about many components was me because of having served a long time and during construction defect legislation.

Kerry, you don't get it. I never said avoid paying for a professional reserve study. I said get involved in your reserve study because *IT MATTERS.*

Reserve companies pay for reference material to create assumptions about EUL and cost. Perhaps they tweak the data for a given local market and/or specific conditions in a particular geography, but they have failed repeatedly, at multiple CICs within a 10 minute walk from where I live, to create reserve studies that are accurate, comprehensive and precise WITHOUT THE HELP OF VOLUNTEERS. Period. End of story.

I've heard plenty of nonsensical comments over the years that "reserve studies are just tools" as a way to justify cost and EUL figures being 100% to over 1,000% inaccurate. Bogus! If your interior carpet and paint project comes in at $250,000, but your reserve study said it should cost $150,000, that's challenging depending on how well funded you are at the time and what other constraints and fiscal resources will be necessary thereafter. If your major window replacement comes in at $5MM instead of $3MM, most organizations don't have the reserve capital available to make it work. They issue a special assessment that could have been avoided with the application of additional effort from reasonable people looking at the data. It does not require a certification or degree or expertise in roofing.

Reserve specialists aren't experts in any one field. They are generalists who use mathematical formulas and sets of data they purchase to create documentation.

Regards,
Steve

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By MarkM19 on 06/17/2022 10:47 AM
Kerry,
Can you imagine if the Tower in South Florida had said that we used our own Software to make Reserve Study decisions? The next thing they would say is it was Betty, Bob, Joan, Joe and Mark that made that study.

Some things are done a certain way for specific reasons. HOAs have many ways to save money without learning to do other people's jobs.

Mark,

Volunteers in many states are statutorily protected from negative legal ramifications of reserve studies up to and including never having a reserve study prepared or failing to ensure timely updates. The Surfside tragedy has nothing to do with who was making reserve study assumptions. Bringing that into this discussion is beyond the pale.

KerryL1 (California)
Posts: 14,550

Posted:

being involved does matter, Steve. I never said it didn't. It's insulting when you often tell posters they "don't get it," or similar. I served with about 20 board members over 14 years. Several had been interested in walking with our analyst, but generally had no useful input and were often incorrect with their uneducated guesses about how long something might last. Tile around the pool, for instance. None would have been interested in looking up the product information which, of course, is available often onsite maintenance manuals. Believe me, I would loved to have had fellow directors who'd learn these these.

It's unfortunate that your area is so rife with incompetent reserve analysts.

A major problem is that developers underestimate the replacement costs of major comments and over-estimate their remaining useful life. This keeps the initial assessments unrealistically low until a certified analyst or specialist does a thorough visit.

Which book, Max, can tell us how long my rooftop-exposed cooling tower will last given that it's xx feet from a wall that rebounds exuded moisture back into this equipment, and given our particular climate?

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By KerryL1 on 06/17/2022 2:21 PM
being involved does matter, Steve. I never said it didn't. It's insulting when you often tell posters they "don't get it," or similar. I served with about 20 board members over 14 years. Several had been interested in walking with our analyst, but generally had no useful input and were often incorrect with their uneducated guesses about how long something might last. Tile around the pool, for instance. None would have been interested in looking up the product information which, of course, is available often onsite maintenance manuals. Believe me, I would loved to have had fellow directors who'd learn these these.

It's unfortunate that your area is so rife with incompetent reserve analysts.

A major problem is that developers underestimate the replacement costs of major comments and over-estimate their remaining useful life. This keeps the initial assessments unrealistically low until a certified analyst or specialist does a thorough visit.

Which book, Max, can tell us how long my rooftop-exposed cooling tower will last given that it's xx feet from a wall that rebounds exuded moisture back into this equipment, and given our particular climate?

Developers are not at fault for poor reserve studies 5, 10, 20, 30+ years into the life of a property. There's no need to guess about useful life. Integrating common sense and data points from other properties is key. Quoting figures from a book that's over 1,000% wrong is the problem. The "traditional" approach to inexpensive reserve studies is the problem. From Decision-Making 101:

The work product of your association's staff and third-party vendors (law firms, consultants, community association manager, etc.) is only as good as the direction, information (facts and context), conversations and questions you exchange. There's almost always a question behind the question. It's the Board's job to ask and then ensure you receive answers. Very little of life in general is as simple as paying someone else to do a job, because those third parties often need oversight and direction that only someone "plugged in" can provide.

"The problem is that good governance, whether in the public or private sector, depends on the initiative and leadership of good people. Having the time and the desire to serve is not the same as having the common sense, judgment, and character to serve well. Lapses in the vetting process, coupled with the absence of any competition for the job, can produce "governors" who, at best, are uninspired and, at worst, draconian (if not morally deficient) in approach." - Paula A. Franzese's Privatization and Its Discontents: Common Interest Communities and the Rise of Government for "the Nice."