A reserve study is a detailed itemized list of every expenditure you can count on over a long term. An example would be how much you’ll need to spend on landscaping for the next 20 years. Reserve studies are required by law in Minnesota to ensure your property’s funding stability. They keep your HOA or tenants secure while they’re living on your property.
Although we provide this service for you, we can also give you the documents to fill out your own. Below are some commonly missed items in a reserve study. These are items you don’t want to miss because it could create some significant gaps in the report. If you need our help, we can walk you through the reserve study so that it’s 100% complete.
What are Some of the Most Important Components
Every state has different requirements for reserve study entries. In Minnesota, some of the components that you are required to fund can include:
● Roof replacement
● Building painting
● Pavement Resurfacing
● Routine structural maintenance
● Systems maintenance such as plumbing, electrical, or HVAC
● Decks, siding, windows, doors
Check with Your HOA
There is often a difference between a property manager’s expectations for a reserve study and the HOA on the property. For instance, you may not worry about the details about landscaping. Your HOA, however, may be very concerned about the details and may want a particular design. Keep in mind; reserve studies usually address minimum requirements. An HOA will probably set higher standards to keep property values competitively high.
What Are the National Reserve Study Standards?
Minnesota reserve study standards and National reserve study standards can look very different. The National Reserve Study Standards establishes a four-part test to determine which of your components should be funded through reserves. The test is a great tool to help you fill in the gaps and discover items you may not have even considered. It will also bring stability to your list so you don’t miss surprises that could set you back.
What is the Biggest Mistake You Can Make with a Reserve Study?
We have found that the most costly mistake you can make is assuming that providing the minimum funding necessary for your components will be sufficient. Whether you’re a board member or a property manager, we can help you create a substantial cushion that will protect you when things happen that you didn’t expect. The rule of thumb: never underestimate the impact of expenditure.
Gassen Can Keep You Financially on Top
To avoid any possible financial issues, Gassen experts can help you develop a healthy reserve study that will keep your property or HOA stable over the long term. Our services extend to property owners and HOAs across Minneapolis and St. Paul, Minnesota. To schedule a reserve study today, contact us at 952-922-5575, or you can message us on our contact page. We are Minneapolis’ premier property managers.