Reserve Study

Your Business Plan for Long-Term Maintenance.™  

What is a Reserve Study?

A reserve study is a detailed report that projects when numerous major components -- such as roof, paving, painting, and communities facilities -- will need to be replaced, what they will cost and how much money needs to be set aside each year to pay for the various components at the necessary time.  Preparing a reserve study requires a unique combination of specialized knowledge in the areas of appraisal, construction, and financial analysis.

Essentially, a reserve study is a budgetary financial planning tool that anticipates major capital asset replacement expenses over the next 30-years.  Your LCAM Resources Reserve Study will contain:

• An inventory of major components and remaining useful life

• An estimate of current and future replacement cost

• A funding strategy tailored to your unique needs

We provide a two-part study that examines both the physical and the financial. In our physical analysis we identify the capital assets of the property and estimate their estimated life expectancy and future cost to replace. The financial analysis is a study that calculates reserve funding and contributions.

Reserve Components

These are major expenses that occur other than annually, and which must be budgeted for in advance in order to ensure the availability of the necessary funds in time for their use. Reserve expenses are reasonably predictable both in terms of frequency and cost. However, they may include significant assets that have an indeterminable but potential liability that may be demonstrated as a likely occurrence. They are expenses that, when incurred, would have a significant effect on the smooth operation of the budgetary process from one year to the next, if they were not reserved for in advance.

Funding Strategies

We will determine the reserve fund satus and develop a reserve funding plan for your annual budget.  Our 30-year report includes a cash flow/pooling method and a traditional, straight-line reserve schedule.  

The cash flow plan utilizes the pooling method and combines all reserve funds into a single general account, taking into account inflation and interest over the next thirty years. The straight-line method is a traditional approach based on straight-line depreciation and can be used for budgets with restricted funds.

	We would be happy to submit a reserve study bid to your association.  To request a free reserve study proposal for your community, just click here.

We want to be your reserve study and insurance appraisal resource for life. Contact us today.