Planning for the Future Capital Reserve Studies

It’s difficult to plan a budget for your building—and, more importantly, to stick to it—if problems arise that your board/management team haven’t anticipated. Maintenance issues and structural crises aren’t just inconvenient surprises; if you haven’t planned adequately, they can decimate your community’s bank account.

Capital reserve studies are one way to prevent surprises from popping up. These assessments are performed by engineers and/or architects who go over your building with a fine-toothed comb: making note of the age, condition, and possible trouble spots of the various components of your physical plant. Data gathered from this study goes into a report that is then submitted to the board and management, who can then use the information to better plan for their building’s financial long-term.

Planning for a Reserve Study

Once your board and management team decides that a capital reserve study is the thing to do, you’ll need to figure out how often you should have one performed. According to experts, you should consider having one done about every five years.

“Conditions to the physical plant can change more—or less—than originally anticipated and costs can also change dramatically,” points out Victor Rich, a veteran CPA with Manhattan-based RSM McGladrey.

According to Rich, costs for a study like this will vary depending on certain factors, including the size and age of the property, demand and competition for similar services in the area, and the quality and depth of study desired by the board.

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What are the Basic Steps of a Reserve Study?

Planning Your Community's Future

Funding Your Reserves

Banking Against Surprises

Capital Funding and the Law

Funding the Big Fixes

Funding Capital Projects

Whence Comes the Money?

Facade Safety

The Cost of Inspections

The Importance of Reserves

Funding the Projects That Really Matter

 

Comments

  • I like your site very much, very informative. My question is about an irrevocable trust I have set up. I would like to put my coop into the trust. I have paid the coop's attorney $700 and submitted appropriate papers. Now the management says first, I need to pay them $625 to complete the paperwork. After speaking to the board president, the management called me and said the fee is now $300. I'm not clear why I'm being charged by the management since the attorney has completed all the paperwork. Does the board make this decision or is the management fee justified and who gets the $300 the coop or the manager?