What will the financial analysis in a reserve study include?

The financial analysis in a reserve study is comprehensive and encompasses various key components necessary for effective financial planning in community associations.

The inclusion of an estimated fully-funded balance is essential as it provides a benchmark for how much should ideally be in reserve to cover future repairs and replacements of the association's common elements. Understanding what a fully-funded balance should look like helps associations gauge their financial health regarding long-term maintenance needs.

A recommended reserve contribution is also a critical aspect, as it suggests how much the association should contribute periodically to the reserve fund. This regular contribution ensures that there will be enough funds available when major repairs or replacements are needed, thus helping to avoid special assessments or financial shortfalls.

Similarly, an estimate of the current funded percentage gives an assessment of how much of the necessary reserves are currently available. This statistic helps the community manager and board understand the association's current position and how it compares to the recommended fully-funded balance.

Together, these components paint a complete picture of the financial readiness of a community association in terms of its reserve funding, which is why all of them are included in the financial analysis of a reserve study. This holistic approach ensures that the association is financially prepared for future maintenance needs.