Finances · 4 min read
What a reserve study tells your board, and what it doesn’t
A reserve study is a long-range plan for replacing the big, expensive parts of your community, from roofs and paving to elevators and pool equipment. Understanding what it covers helps your board use it well.
The two parts of a reserve study
A reserve study has a physical analysis, which lists each major component, its condition, its expected remaining life and its replacement cost, and a financial analysis, which compares your current reserve balance with what you need and recommends a yearly contribution.
What it tells you
- Which major repairs are coming, and roughly when.
- How much each is likely to cost in today’s money.
- Whether your reserve fund is on track, and how much to contribute each year.
What it doesn’t tell you
- It isn’t a detailed engineering inspection. Hidden problems may need a specialist.
- It doesn’t cover routine maintenance, which belongs in the operating budget.
- Cost estimates change with inflation and market prices.
Keep it current
Many associations update their study every few years, with a full site visit less often. Your governing documents or local law may set specific requirements, so check them.
Turn it into a plan
The study is only useful if it shapes decisions. Use it to set the reserve contribution in each annual budget, schedule projects in advance, and explain to owners why saving now avoids special assessments later.
Questions about your community?
Our team is happy to help. Email info@epsilonpm.com or request a proposal.