J.B. from Hartford County writes:
Dear Mister Condo,
We are in the process of reviewing the reserve fund. Is there a minimum reserve figure we should be establishing for a community 15-22 years of age? We will be reviewing roof and future roadway issues as part of this review.
Mister Condo replies:
J.B., Kudos to your community for performing due diligence by conducting a Reserve Fund review. Fiscal prudence is an important virtue for any successful common interest community. As the old saying goes, “a failure to plan is a plan for failure”. I know that there is no “one size fits all” approach to determining a proper reserve figure so I asked my friend, Tim Wentzel, owner of Connecticut Property Engineering, for an expert opinion to your question. Here’s what Tim had to say:
This is an interesting question. Many years ago, before Reserve Studies were common, many property managers used to say that an association should have $1000 per unit in reserves. However, that really doesn’t tell a true story. For example, Association A may have just paved their roads and parking, replaced their roofs and replaced their siding. Association B may have done none of those tasks. The $1000 per unit may be sufficient for Association A but may be far short for Association B. The only real way to know is to have a professional reserve study done that evaluates the upcoming costs, when the money will be needed, and then calculate what should be set aside.