A reserve study is a budget planning tool which identifies the current status of the Reserve fund and a stable and equitable Funding Plan to offset the anticipated future major common area expenditures. This type of planning is beneficial for all kinds of organizations including associations or common interest developments such as a condominiums or timeshares as well as private organizations such as non-profits, apartments and commercial buildings.
There are three different levels of reserve studies. The level of reserve study needed is determined by when the last reserve study was completed and/or the depth of planning desired. One level of study is not better than another when used at the proper time. Below we provide a summary of each level.
Levels of Services
Level I: Full Reserve Study
This is the most labor intensive Reserve Study. It includes both a Physical and Financial Analysis. The Component Inventory list and current component Condition Assessments with Life and Valuation estimates are determined from a visual on-site inspection. This information is used to conduct the Financial Analysis which includes the current Fund Status and our recommended Funding Plan. A Full Reserve Study is recommended when there are concerns with an existing Reserve Studies Component Inventory or measurements.
Level II: Update with Site Visit
This report updates both the Physical Analysis and Financial Analysis of an existing report. A site inspection is conducted to verify and/or make adjustments to the existing Component List, Condition Assessments, Useful Life and component Valuation Estimates. The Financial Analysis is also updated, including the current Fund Status and recommended Funding Plan. A Level II report is recommended at least every three years, before and after major projects and as required by state law.
Level III: Update without Site Visit
This report updates the Financial Analysis only. The current Fund Status and Funding Plan is updated using research conducted with Board members, vendors, association managers and information contained within a prior Reserve Study. A Level III report is recommended to review, adjust and verify that the existing funding plan is accurate and suitable for current economic conditions