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AlexL1
(Florida)

Posts:149

08/15/2008 10:42 AM
Am I wrong? I have conacted sseveral (actually only 2) companies that perform/do a reserve analysis for HOAs.....Their charge is o/a $1,000. All we have to do is answer (which I did) about 10 questions and that is it.. then they send an estimate for what it will cost. They do NOT come to the site.. they just plug figures into the computer and out comes the estimate. My concern is...a) How do they know the condition of the roof?; b) If we have pool chairs, how can they tell the life longevity of those?; c) how can they determine the life duration of the grills at the pool? etc etc etc NOW.. IF.... IF.... we want them to come out and LOOK at the chairs, the buildings, etc etc, the price goes ukp about three fold. Is this the way an analysis is conducted? by plugging numbers into a computer?

DonnaS
(Tennessee)

Posts:2796

08/15/2008 10:52 AM
Alex, As an example of something to compare to, my HOA upon our "turnover", decided to have an engineering study done in order to have a good grasp on where we were with setting up the Reserve funds. I realize that your HOA is not like mine was, but just to kick this into the pot, we spent $25,000 for the study. It was well spent because we had a couple of hugely expensive infrastructure items that the Developer needed to fix or else we would not sign off on his bond money being held. Based on that, we then knew about how much to Reserve. Now, if I remember right, you are either manufactured or mobile homes? Your Reserve Funds should be allocated for major items like buildings, roads, pools, sewers or irrigation and infrastructure items. The Reserves do not cover chairs, grills and all of what are known as "disposable items" So if you want to spend more money, then you do need a certified inspector to look at the items in person. The Reserve fund money that you spent already seems excessive. Maybe they can apply that charge towards a full inspection.

GeraldT4

Posts:932

08/15/2008 10:56 AM
AlexL1 - A proper reserve study should include a comprehensive physical inspection, and mathematical calculations of the common elements the association is to replace over time. Every common element, including but not limited to roadways, roofs, mechanical systems (HVAC), sidewalks, and pool furniture should be included. Sounds like the service you are talking about is a ripp-off, $100.00 per question? That's ridiculous.

GeraldT4

Posts:932

08/15/2008 10:58 AM
DonnaS - Maybe your study didn't include chairs, however mine does, as well as clubhouse furniture, etc. Anything the association is to replace has a life-span, the estimated unit cost of measure of which can be calculated and funded for over time.

DonnaS
(Tennessee)

Posts:2796

08/15/2008 11:01 AM
Gerald, We put the pool furniture under the yearly pool budget so thats where the difference is. Clubhouse furniture is definitely under the Reserves for that place. They just had to have 2- 60 inch plasmas at $8000.00 plus.

GeraldT4

Posts:932

08/15/2008 11:11 AM
DonnaS - I was just trying to point out that pool furniture can be in the reserve analysis because that is where all the elements the association must maintain are calculated (cost, life-span). I guess the Board can then make a decision to fund the replacement cost through another line item in the budget. Either way, it's good to know how much something cost, estimate how much it will cost, and fund for that replacement over time.

AlexL1
(Florida)

Posts:149

08/15/2008 12:54 PM
It is strange... I talked in length to tw0 (ove the telepohone of course) and briefly contacted another but all do not come out to the property UNLESS we pay much more and I asked them HOW they can judge one of the more important things, the roofs, without looking.. they said they merely ask if it is shingles, tile, etc and go from there.. I said yes, but what is undernesath is VERY VERY IMPORTANT but they said to them it is not.... I asked how they can judge how much longer the grills will last if they did not look at them .... NOR even ask about them and they said the computer does it.

SusanW1
(Michigan)

Posts:2117

08/15/2008 1:32 PM
Yes, Alex, the computer would do it. Item, cost of new item, item's life, item's remaining life. Put it into a chart and you will come up with lots of reserve category "items", and an annual amount needed per year for X years until the item needs to be replaced. The 10 questions probably involve a lot or pre-research on YOUR part. The info is fed into the computer program, and out spits a chart. You will have the "basics" for a reserve fund plan. Do some more research on companies or individuals who do reserve fund studies.

KirkW1
(Texas)

Posts:1110

08/15/2008 2:18 PM
In any Reserve Analysis you will identify items and their expected life. In some cases the life it until repair, others until replacement. And the computer will happily tell you that a shingled roof (30 year expectancy) costs on average X dollars. And if that roof has been there for 5 years, you have 25 more (average) to build up funds for replacement. You are quite correct though in that the 30 year roof may last longer or shorter. And the only way to predict that is to actually inspect the item. And even that has some limitation as it wouldn't due to rip up the roof to see that the paper underneath was installed correctly. Of course an inspection will cost money. And many organizations have a short supply. Even if the supply isn't an issue, do you really need an inspection every year? I won't try to answer for you, but I would feel fine with not inspecting every year. At the same time I wouldn't feel comfortable with never having a physical inspection.

GeorgerwilliamsW
(Indiana)

Posts:705

08/16/2008 5:56 AM
Since it has not yet been suggested, let me recommend a visit to the following web site: Association of Professional Reserve Analysts (APRA) http://www.apra-usa.com/

SusanW1
(Michigan)

Posts:2117

08/16/2008 6:43 AM
There also is the issue of the terms used: Reserve Study, Reserve Analysis and Replacement, Reserve Study with Site Inspection,and HOA Funding Study are all terms that I have seen used.

GeorgerwilliamsW
(Indiana)

Posts:705

08/16/2008 6:49 AM
Posted By SusanW1 on 08/16/2008 6:43 AM There also is the issue of the terms used: Reserve Study, Reserve Analysis and Replacement, Reserve Study with Site Inspection,and HOA Funding Study are all terms that I have seen used. Are you familiar with a "transition study." I have not had any experience with a homeowners association or developer that has conducted one.

SusanW1
(Michigan)

Posts:2117

08/16/2008 6:54 AM
Sounds like a "condo" term - turnover term used to desribe a study from the developer to the association.??? Not sure Others will flesh out the definition, I'm sure.

DonnaS
(Tennessee)

Posts:2796

08/16/2008 7:09 AM
Susan, I wonder if George means what we packaged as an "engineering study" which encased all and any of the infrastructure of the developement including a financial and document scrutney.

GeorgerwilliamsW
(Indiana)

Posts:705

08/16/2008 8:57 AM
Found the answer to my own question. Note the definition of a reserve study. It is broader than just a focus on elements with a "defined life." Transition Study, Reserve Study What’s the Difference? Today, most homeowner associations and property managers are familiar with what a Reserve Study is and the crucial role it plays in the future of the association. There also exists a study that is not as well known, but is decidedly just as important in shaping the repair and replacement schedule of an association, the Transition Study. A Reserve Study is the physical and financial analysis of all common elements that the board is responsible for maintaining. It details a repair and replacement schedule over the next thirty years. A Transition Study is an independent analysis of the common elements to identify the estimated cost to remediate condition, construction and design defects. A Reserve Study determines remaining useful life due to normal wear and tear and a Transition Study identifies only defects relating to condition, construction or design. While a Reserve Study can be conducted at any time, a Transition Study should be done near the date of turnover from the developer to the association board. It is important for new construction and recent conversion properties to be aware of the benefits a Transition Study can provide. http://www.apra-usa.com/APRAAdvisorFebMar2008.pdf

GrahamO
(Ontario)

Posts:50

08/19/2008 8:28 AM
AlexL1 Sorry for entering this discussion a bit late but I hope what I can contribute may help. Your first posting expressed concern, and rightly so, about the casual way some planners were conducting reserve studies. “At arms length” I guess we’d call it! But if I had to separate a reserve study into its parts, I’d come up with two. One would indeed be the part that estimated the costs and timing related to future repairs and expenditures. A good professional planner will visit the site — and that’s NOT an option — inspect the property thoroughly, and arrive at a table of figures. But a Reserve Planner is not the only one that can do this. Any qualified buildings consultant or engineer can do it. The second part would be putting these numbers together with a funding plan and, at the same time, introducing calculations for earned interest on the balances and for inflation. This can be done by anyone who understands the “model” (mathematics) but there is software that will handle this part very well and very easily. If you were interested, please contact me and I’ll send you a new paper we’ve prepared called “Creating a Reserve Plan from Scratch”.

Graham Oliver Official HOATalk.com Sponsor Author of "Reserve Fund Essentials" Oliver Interactive, Inc Reserve Fund Software & tools Learn More about our FREE Reserve Planning Tools *See legal notice below (end of page) or go to www.hoatalk.com/legal

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