Your homeowners association reserve fund plays a crucial role in maintaining community assets. To determine the necessary amount, you need to conduct an HOA reserve study. Since there are a lot of strict requirements involved, the process can be quite complex. If you want to properly establish an HOA reserve fund, it may be beneficial to work with experts in this field. Here are important factors to consider when choosing an HOA reserve study company.
6 Factors to Consider When Choosing Your HOA Reserve Study Company
Having professionals conduct your homeowners association reserve study may be costly, but the information they provide will be crucial to the success of your community. An HOA reserve study company can also prevent an inexperienced board from making even costlier mistakes. Since this is a community investment, you need to make sure that you are choosing the best HOA reserve study company.
Here are five important factors to consider:
1. Your HOA Financials
You need to be prepared before meeting with HOA reserve study companies. The board must have a thorough understanding of community financials and other related matters.
You should know about your community assets, HOA expenses, funding goals, and any patterns of last-minute repairs that occur, among others. This will inform the reserve fund firm on exactly what kind of capital you will need in your HOA fund in case of an emergency.
2. Experience and Qualifications
Since boards may not have the expertise to conduct physical and funding analyses, you need to choose an HOA reserve study firm that is experienced and qualified. Research to learn as much as you can about the companies you will be interviewing. You may also want to stick to firms that are accredited by the Community Associations Institute, Association of Professional Reserve Analysts, or other industry-related organizations. This not only guarantees a high experience level, but also compliance with standard procedures and a code of ethics.
3. HOA Management
Don’t hesitate to consult your HOA management when looking for a reserve study company. Most experienced property managers will have a list of qualified firms to handle your reserve funds. Working with HOA management is wise because you’ll be able to have all the information you need at your fingertips. This is more efficient than searching endlessly online without knowing if you can trust the company you are contacting.
4. Reserve Study Costs
All HOAs want to work with the most qualified and experienced reserve specialist. However, you also need to consider your budget when choosing an HOA reserve study company. You need to determine how much you are willing to spend on your reserve study.
Reserve study costs can vary. It will be higher if you decide to hire a separate engineering firm for the physical analysis and an accounting firm for the funding analysis. If the budget is tight, choose a reserve study company that has expertise on both reserve study components.
Your board or HOA manager’s involvement can also affect reserve study costs. Will the board or management have a large role in the reserve study process? It’s possible that the board/management will perform more tasks and the reserve study company will act as a consultant. The scope of work can determine whether you will have high or low reserve study costs.
5. Legal Liability
Boards who choose to conduct reserve studies will open themselves to potential liability. Board members are essentially volunteers, so they likely do not have the accounting and estimating skills needed to conduct a reserve study.
If the reserve study does not meet the standard requirements, the board can make mistakes that will significantly affect the rest of the community. With a qualified HOA reserve study company, the board will not have to worry about potential legal liability.
Keep in mind, though, that the board is still ultimately responsible for the results of the reserve study. That’s why it’s important to choose the best reserve study company for your HOA. Even then, it’s still wise to ask for liability insurance.
Location is also an important factor to consider. You want an HOA reserve study company that operates within your vicinity. It will be easier to communicate with them — or even visit their office if the need arises. Being in the same location means that they are aware of local statues and conditions. They will also be able to provide you with realistic reserve study estimates.
How to Assess HOA Reserve Companies
Apart from these five factors, there are also other things to consider when choosing an HOA reserve company.
1. Create a List
Create a list of qualities you are looking for in an HOA reserve study company. If you are working with a property management company, consider their opinion on this issue. They can advise you on what common pitfalls to avoid as well as important questions you need to ask your potential reserve study company.
2. Contact and Compare
Contact at least more than one HOA reserve study company during the search process. Create a comparison chart of how they answered your questions, and which one has the best offerings that match your community’s size and overall needs. This way, you’ll be able to find the ideal fit.
3. Ask for References
Even if the firms you are interviewing come highly recommended, you should still ask for references. References need to be someone you can call. There are many ways to falsely manage a business’s reputation on the internet today, which means that negative reviews that are accurate may be hidden. Contact references so that you can get the most honest reviews. In turn, you’ll have the information you need to make the best decision.
Choosing the Best HOA Reserve Study Company for Your Community
Take all the time you need when deciding on the best HOA reserve study company. Choose who you feel is ideal for your community and will ultimately protect your members. Remember, the size of your community will dictate your specific reserve study needs. Just consider all these factors and once you’ve weighed everything, you’ll be able to start your reserve fund. If you’re still unsure about choosing an HOA reserve study company, don’t hesitate to give us a call.