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PROVERB – Wiktionary


- a FOOL and his MONEY are soon parted





 


None of us wants to be considered foolish, and


often,


Boards err on the side of micro-managing to avoid looking foolish. So, let’s delve into the possible scenarios for looking foolish in your reserve spending, avoid the possibility of micro-management and develop a reputation for a community that thinks and plans ahead, and leaves homeowners with a sense of security.


There’s a process with reserve spending on large projects which involves due diligence on the front end and the development of a plan in advance of large expenditures. Here are the steps to avoiding disaster:


1. Complete an RFP (Request for Proposal) process with reserve professionals, hire the preferred reserve professional, preferably at least 6 months in advance of budget season, and have a final draft of the reserve study for your budget preparation.


What is so important within that study? Aside from the current and immediate future fiscal year’s required spending, it’s important to look at any major expenses that may be planned or occurring within the next 5 years. If it involves anything having to do with a change in the appearance of the community (lighting, siding, roofing, painting, shutters, etc.), you have several decisions to make, which leads us to our next step.


2. Depending on what the community needs, there could be one to two years of research involved with a major capital reserve expenditure. Where to even start? Start by asking questions. A survey of the board members, management company, reserve professional and perhaps the auditor, is a good idea. Gather the answers that each of you THINKS is the correct answer, and together you’ll develop the ACTUAL answer. Below is a list of things you need to start considering. This list is not exhaustive but it will get you started.


 COULD update the look of your community?


 compete in the market?


 place of actual replacement with like products?


        of the products that may offer the homeowners additional comfort in their home or in their community?


 item may allow for increased security within the community?


 the participants’ eye, and if so, what about that community caught their eye?


3. After asking questions of your professionals and those that live within your community, it’s time to consider the process. Who is going to be helping, how much will it cost, and what options exist?


| 


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