reserve funds and working capital?

First of all, welcome Courtney, you will find this to be a great place to learn and get a wide variety of viewpoints. There are a few thing that would be helpful to know. Is that 6 homes total – only 6 or will there be more homes in the future? What do your CC&Rs say about the Capital Contribution? (I have seen some specify that a portion is for ---) What do governing documents say are the common elements? Are you gated? Did your developer provide you with a proforma or preliminary budget? Did your developer provide you with a reserve study?

Where to invest? Our association has our operational funds in an operational checking account and a small amount in a money market as well as a ladder of CDs for our reserves (their maturity dates are different so that we have one maturing every quarter, so that when we know we need to have it for planned maintenance (such as asphalt re-sealing) we can plan around the maturity of the bond.

Smaller associations can be a little more delicate to handle because there are very few who serve in a close knit community. Say someone parks their vehicles on the common street and the vehicle leaks oil (a big issue when you are looking to maintain asphalt over the long term) – everyone knows whose car it is. So my best advise from for a small 6 unit association – pro active communication on everything. Some people feel information is power and to horde it makes them more powerful… You don’t want to become a slave of the HOA, share information.

Gerald,
Thanks for the reply. What exactly is the working capital for if it does not go towards routine/scheduled maintenance that the Reserve money goes towards? Sorry but what exactly does the IMHO in association funds stand for?
Thanks.

we do it like this,the operating account for regular expenses like cutting the grass cleaning the pool and taxes and such. areserve account for long term replacment for fixed assets like repaving the roads resurfacing the pool,with each line itemed and amoritized over the life expetancy of the asset. thier are two schools of thought on this,1 save up for it so you have the 300,000 when you need it. or asses when the time comes. in fla. a condo assoc. can not use funds from reserve for any thing other than which it was intended. in a fla. hoa they can. in my assoc. we had saved 700,000 in reserves line itemed for certain fixed assets, they were squanderd in one shot on mountains the bod at the time was of the opinion that being most of the membership was from up north we must miss the rolling hills. and the pres. just happend to have a brother with a exavating co. i kid you not thats what happend, and it was perfectly legal. so see what your docs say about mingeling funds. also some members dont understand or dont care about the concept of the assoc. being in good shape long after they are planing to sell thier house. and will not be in favor of reserves.