MikeB23 (Louisiana)
Posts: 109
Posts: 109
Posted:
What are others using as a guideline for how much should be held in the HOA's Reserve Account?
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RESERVE ACCOUNT
Started by MikeB23 • 19 replies • 286 views
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ElleN (Idaho)
Posts: 4,420
Posts: 4,420
Posted:
?
The only guideline for how much //should// be held in the HOA's reserve account is a reserve study prepared with reasonable input from the board.
The only guideline for how much //should// be held in the HOA's reserve account is a reserve study prepared with reasonable input from the board.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
Your certified reserves specialist will tell you how much your HOA "should" be contributing to be 70-100% funded. This amount will be in on the cover page of the reserve study prepared for your HOA. Has your HOA had a reserve study done? And/or does your HOA have a reserves account of some kind?
JimA19 (Georgia)
Posts: 54
Posts: 54
Posted:
if you have an inspired homeowner who will learn the HOA can do its own. there are instructions and federal and california cost/durability estimates that can help
LetA (Nevada)
Posts: 2,679
Posts: 2,679
Posted:
Quote:
Posted By MikeB23 on 01/06/2024 9:17 AM
What are others using as a guideline for how much should be held in the HOA's Reserve Account?
What are others using as a guideline for how much should be held in the HOA's Reserve Account?
Does Louisana have any state or local laws that state all HOA's reserves must be X% funded? Nevada for example says all HOA's
reserves must be 85% funded.
DeanJ
Posts: 1,786
Posts: 1,786
Posted:
Quote:
Posted By MikeB23 on 01/06/2024 9:17 AM
What are others using as a guideline for how much should be held in the HOA's Reserve Account?
What are others using as a guideline for how much should be held in the HOA's Reserve Account?
Let’s put it this way, if you were substatially under funded in 2021, inflation has killed you in 2022 and 2023.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
Interesting, LetA. Does LA require (1) a reserve study?; (2) a reserves account? Or/aslo is there anything in air declaration about this topic?
ElleN (Idaho)
Posts: 4,420
Posts: 4,420
Posted:
Quote:
Posted By LetA on 01/06/2024 2:35 PM
Nevada for example says all HOA's reserves must be 85% funded.
Nevada for example says all HOA's reserves must be 85% funded.
I see this nowhere in Nevada's statutes. Which comes as absolutely no surprise. Guess why.
TimB4 (Tennessee)
Posts: 21,061
Posts: 21,061
Posted:
As others have said, there is no rule of thumb for Reserves.
If your Association has not had a reserve study done, I would recommend getting one done (as the study tells you how much needs to be set aside each year).
To learn more about reserve studies, see the following thread:
Subject: Reserve Studies/Funds 101
NOTE: It is a very old thread. Some links are broken. Some links have been repaired later in the thread. It still has good information. Please don't reactivate that thread by posting to it. Instead use your current thread or start a new one if you have questions, comments or concerns.
If your Association has not had a reserve study done, I would recommend getting one done (as the study tells you how much needs to be set aside each year).
To learn more about reserve studies, see the following thread:
Subject: Reserve Studies/Funds 101
NOTE: It is a very old thread. Some links are broken. Some links have been repaired later in the thread. It still has good information. Please don't reactivate that thread by posting to it. Instead use your current thread or start a new one if you have questions, comments or concerns.
MarkM19 (Texas)
Posts: 1,459
Posts: 1,459
Posted:
Jim A,
I do not agree with your advice. I doubt any community has an Inspired volunteer who could do this on their own. Garbage In garbage Out.
This has been talked about numerous times in the recent past on this site. A specialist has all of the actuarial tables and also the knowledge of what to look for and what to include in professional studies. All you would be doing trying to get this done on the cheap is setting up someone to fail. Just for the record even the professionals make mistakes and need to be given good information to create the correct study. I recently found in the latest study we had from 2021 had concrete walkways included as our responsibilities. Our community has many paths that are owned and maintained by our MUD districts. I won't go into detail about this because I think it is a Texas thing. They have the right aways in and around our community and all others in the area. We pay taxes to this body, and they maintain the walkways. All of our other streets are maintained by the county. This was an error in our favor but if you but done wrong could be costly in the other direction.
I do not agree with your advice. I doubt any community has an Inspired volunteer who could do this on their own. Garbage In garbage Out.
This has been talked about numerous times in the recent past on this site. A specialist has all of the actuarial tables and also the knowledge of what to look for and what to include in professional studies. All you would be doing trying to get this done on the cheap is setting up someone to fail. Just for the record even the professionals make mistakes and need to be given good information to create the correct study. I recently found in the latest study we had from 2021 had concrete walkways included as our responsibilities. Our community has many paths that are owned and maintained by our MUD districts. I won't go into detail about this because I think it is a Texas thing. They have the right aways in and around our community and all others in the area. We pay taxes to this body, and they maintain the walkways. All of our other streets are maintained by the county. This was an error in our favor but if you but done wrong could be costly in the other direction.
TimB4 (Tennessee)
Posts: 21,061
Posts: 21,061
Posted:
Quote:
Posted By MarkM19 on 01/08/2024 6:45 AM
Jim A,
I do not agree with your advice. I doubt any community has an Inspired volunteer who could do this on their own. Garbage In garbage Out.
Jim A,
I do not agree with your advice. I doubt any community has an Inspired volunteer who could do this on their own. Garbage In garbage Out.
Mark,
I did my Associations first reserve study.
Was it perfect? No.
Were things missed? Yes.
Was it better then no study? Absolutely!
I found that many companies are willing to help you determine life expectancy with a promise to have them be included in the bid process when needed.
You can easily obtain replacement costs and what maintenance may be needed with some research on the internet.
When we did our second study using a reserve specialist - I wasn't that far off and where I was off, I was higher vs. lower.
If you are a condominium, have a pool or a clubhouse I would strongly recommend an engineer to do the study or a reserve specialist vs. doing one on your own. However, if there are minimal elements, even with private roads, you can do a fairly good study yourself.
The link I provided has other links that can get one started.
MarkM19 (Texas)
Posts: 1,459
Posts: 1,459
Posted:
Tim,
You have obviously been around for a long time proven by your 19,000 + posts. I always look forward to your comments because it comes with years of experience. As with many of the posters on this site recently we get limited information about the community in question. Amenities and size of the community play a huge part in some of our comments without key information we are left to speculate.
In most cases my advice would be to always start with a professional study and then if you have a detailed volunteer who can use that study on future years to make decisions you would be safe. I think it is risky to leave it to the person who raises their hand and takes on the job without a clear map of the HOA/COA they live in.
You have obviously been around for a long time proven by your 19,000 + posts. I always look forward to your comments because it comes with years of experience. As with many of the posters on this site recently we get limited information about the community in question. Amenities and size of the community play a huge part in some of our comments without key information we are left to speculate.
In most cases my advice would be to always start with a professional study and then if you have a detailed volunteer who can use that study on future years to make decisions you would be safe. I think it is risky to leave it to the person who raises their hand and takes on the job without a clear map of the HOA/COA they live in.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
I think I recall that in the HOA for which Tim prepared a reserves study had very few amenities, i.e., "components" for which the HOA was responsible to repair/replace.
I agree with Mark--have a LOCAL professional certified reserve specialist do the initial study. That preparer knows the estimated remaining life of components that are subject to weather-related wear & tear based on studies done of other HOAs. This is something one can't look up in manf specs or their own HOA's Maintenance Manual.
As Tim points out, these socialists want your business and may be willing to come to your HOA and give you and estimate for the cost to do a study. during thier "visit," you can learn a lot about what matters for your study.
In CA, the developer must submit a "reserve"study" before the project is approved at the state level. Don't other states have that requirement? Another reason there should already be a "study" done is so that annual dues assessments can be estimated for pontetntial buyers.
I agree with Mark--have a LOCAL professional certified reserve specialist do the initial study. That preparer knows the estimated remaining life of components that are subject to weather-related wear & tear based on studies done of other HOAs. This is something one can't look up in manf specs or their own HOA's Maintenance Manual.
As Tim points out, these socialists want your business and may be willing to come to your HOA and give you and estimate for the cost to do a study. during thier "visit," you can learn a lot about what matters for your study.
In CA, the developer must submit a "reserve"study" before the project is approved at the state level. Don't other states have that requirement? Another reason there should already be a "study" done is so that annual dues assessments can be estimated for pontetntial buyers.
DouglasK1 (Florida)
Posts: 2,046
Posts: 2,046
Posted:
Six or seven years ago I was in a similar boat as Tim, a SFH association with no amenities where the main responsibilities were the roads, sidewalks, storm drainage, and entry/exit gates. Our annual budget was 30k, there was no way the board was going to spend thousands on a reserve study.
Luckily our county does require gated communities to have an engineering inspection every three years, and that did include state of the roads and other infrastructure to one degree or another (only a cursory inspection of the drainage system for example) along with a ballpark estimate to resurface the roads. Using info I found online including Tim's posts I created our first reserve study. Since prior boards had been aggressive about funding reserves due to county requirements we were well over 100% funded even though they really didn't have a good handle on how much they needed to have socked away.
Generally condos have much more responsibility and I certainly would not recommend DIY for those associations.
Luckily our county does require gated communities to have an engineering inspection every three years, and that did include state of the roads and other infrastructure to one degree or another (only a cursory inspection of the drainage system for example) along with a ballpark estimate to resurface the roads. Using info I found online including Tim's posts I created our first reserve study. Since prior boards had been aggressive about funding reserves due to county requirements we were well over 100% funded even though they really didn't have a good handle on how much they needed to have socked away.
Generally condos have much more responsibility and I certainly would not recommend DIY for those associations.
Escaped former treasurer and director of a self managed association.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
Good point about condos, Douglas. A lot more common area components than in many SFH HOAs, e specially if multiple-stories.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
Good point about condos, Douglas. A lot more common area components than in many SFH HOAs, e specially if multiple-stories.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
Good point about condos, Douglas. A lot more common area components than in many SFH HOAs, e specially if multiple-stories.
KerryL1 (California)
Posts: 14,550
Posts: 14,550
Posted:
Good point about condos, Douglas. A lot more common area components than in many SFH HOAs, e specially if multiple-stories.
KellyM3 (North Carolina)
Posts: 2,239
Posts: 2,239
Posted:
Mike,
Your HOA wants to be as close to 100% funded as possible in Reserves. If the HOA doesn't have the value of the reserves, then get a reserve study and it will set you on a path (or shock and awe you).
Your HOA wants to be as close to 100% funded as possible in Reserves. If the HOA doesn't have the value of the reserves, then get a reserve study and it will set you on a path (or shock and awe you).
MikeB23 (Louisiana)
Posts: 109
Posts: 109
Posted:
Quote:
Posted By LetA on 01/06/2024 2:35 PM
Posted By MikeB23 on 01/06/2024 9:17 AM
What are others using as a guideline for how much should be held in the HOA's Reserve Account?
What are others using as a guideline for how much should be held in the HOA's Reserve Account?
Does Louisana have any state or local laws that state all HOA's reserves must be X% funded? Nevada for example says all HOA's
reserves must be 85% funded.
Nope. Just a requirement for a Reserve Fund, not amount specified.
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