Quote:
Originally Posted by MeEscape
So, how does one know if the reserves are properly funded?
Do you know of a formula or a good website to help evaluate?
I own in a ski area HOA which has a long term capital study completed however, given the current need for roads, roofs, etc. there isn't much hope to "put away" much more on an annual basis.
Interested in any insight.
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Reserve Funding is an interesting topic...
What most banks and lending institutions like to see if they decided to look into it as part of your loan processing is that around 15% of your condo fee goes into the reserve fund.
However this isn't the entire story... Because if a reserve account isn't properly funded, and funds are needed an association has the ability to charge an owner a assessment based on a project funding need. I have often seen this happen when it comes to things like roofing or parking lot paving.
So if you look further not only do you need to look at how much is going into the reserve account but how much is coming out of that reserve account for the upkeep of the property. You want the reserve funds to be in constant state of growth year over year, building up to what will be needed to cover
large expenses like roofing and paving, when they are do to be replaced. If a reserve fund was not properly funded to start with, the contribution to the reserve may need to be higher for a while to get it properly funded...