How To Find A Reserve Expert For Your Condo
In a condominium corporation, reserve fund studies are necessary to properly maintain the property and fund its reserve account. It’s the job of a reserve fund study professional, also known as a reserve planner or reserve analyst, to conduct a reserve fund study. Follow this guide to help your community find the perfect reserve fund study professional.
What is a Reserve Fund Study?
A reserve fund study looks at the reserve fund and analyzes all foreseeable major repairs and replacements. For example, if your community has an amenity with fencing that needs to be replaced every ten years, the reserve study can calculate how much your community needs to save to make the repair at the appropriate time. Typically, reserve fund studies are comprised of two parts:
- The physical analysis. Evaluating the physical status of the corporation and estimating the repair and replacement costs of the major common area components.
- The financial analysis. Assessing the current reserve fund status and recommending an appropriate reserve contribution rate.
What is A Reserve Fund?
A reserve fund is money set aside by a condominium corporation for future major replacements and repairs that don’t typically occur on an annual basis. Typically, money is raised through monthly condo fees. It’s then used on things like:
- Roof replacements
- Pool pumps
- Playground equipment
- Replacing fencing in common areas
- Painting of common areas
- Construction and major renovations
- Road and sidewalk resurfacing
To determine how much money your corporation should have in its reserve fund and ensure you’ll have enough money for a repair or replacement, it’s critical to regularly conduct a reserve fund study.
Who Conducts Reserve Fund Studies?
Condominium Corporations should hire a reserve fund study professional to conduct their reserve study. People in these roles are trained to handle the detailed and complex nature of a typical reserve study.
The Condominium Act of Ontario provides a list of professions who are qualified to complete a reserve fund study, however even within these professions, the Board should ensure that the individual chosen has experience with condominiums. Qualified individuals must demonstrate their excellence in the practice through years of experience, education in a related field, and compliance with ethical standards. It’s important for boards to do their due diligence when hiring a reserve specialist.
What to Consider When Finding a Reserve Fund Study Professional
1. Budget
Before exploring your options for a reserve fund study professional, you’ll need to look at your budget to determine how much money you can allocate to finding and hiring someone for the role.
The cost of a reserve study varies with the size, complexity, and location of your community. The cost for conducting a first-time reserve study will likely differ from that of a subsequent reserve study. Knowing what your financials look like and understanding the types of reserve studies is a crucial first step to finding the right reserve study professional.
2. Study Type
The most common forms of a reserve fund study are:
- A full (Class 1) reserve fund study. A full study looks at all aspects of your community’s structures, gathering an inventory of the components used to maintain those structures and their condition. It also includes an analysis of your corporation’s funds. A reserve specialist creates a comprehensive plan to keep your community well maintained and functional.
- A reserve fund study update with a site visit (Class 2). Class 2 studies are less thorough than a full analysis, but a reserve analyst does visit your community to check on the property and reassess valuations, funds, and costs, as needed. Updates are required every three years at a minimum.
- A reserve fund study with no site visit (Class 3). Class 3 updates do not include an on-site visit. A reserve analyst collects information about the upkeep of the community from conversations with the board, management, vendors, and maintenance staff. These kinds of studies are meant to be used on a rotating three year basis with Class 2 studies.
3. Location
Each community and city may have unique requirements or by-laws to consider. That’s why you should hire a reserve study professional that’s familiar with your specific regulations. In addition, if you hire locally, you could also benefit from:
- Easier communication
- Local references you can contact
- Better knowledge of available resources
- More realistic cost estimates
- More affordable services
4. Experience
Attention to detail is key to an effective reserve fund study, so it’s crucial to hire the most experienced and qualified professionals to get the job done. Experience matters and can make all the difference in the quality of work. Look for professionals with:
- Industry accreditations.
- Previous experience that suits the role. Firms or individuals with condominium experience will be best suited to handle the needs of your community during the reserve fund study process. Ensuring they also have the formal education that’s directly connected to the structural knowledge required to perform at the top level will ensure a successful relationship.
- Information on workplace structure. Organizations with a team of in-house analysts may have additional training opportunities or staff quality assessments that you might not find with independent contractors.
- References or examples of previous work. Look for analysts who break down what you can expect from their work. Ask for references that are similar in size and budget of your own community.
Learn More About Reserves
A reserve analyst has a detailed understanding of reserve fund studies and funds, but do you? Your reserves can make or break your community. Check out our ebook, “8 Essential Things You Need To Know About Reserve Funds & Studies,” to find answers to commonly asked questions about the process and helpful tips from reserve experts.