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association common component to fail and reach the end of its useful life unexpectedly. The unforeseen tough winter that we had in the Midwest last winter has wreaked havoc on many roofs in this area. The unseen changing tenants in a condominium building can either make the common area carpeting last forever, or destroy it overnight.

Likewise, with good maintenance the expected useful life of common components can be extended well beyond the typical useful life. For many reasons it is very important for both the association board and property manager to periodically get a good overall condition assessment of their common components. The condition assessment information provided in the reserve study empowers the board to be able to make well informed decisions

How do you find treasure in your association’s building or community? By using a reserve study!

when it comes to how they are spending their operating and maintenance budget. They should be able to see the direct impact of the money they spend, or do not spend on maintenance reflected in the condition of their common components. Then again, maybe the board has spent a lot of money on maintenance, but is not seeing any return on that investment. All this information provided by the physical condition assessment in the reserve study empowers the board with the information they need to make sound and informed decisions in the best interest of their community.

Financially, the reserve study provides the association with not only an analysis of the financial health of their reserves, but also provides essential input to the annual budget. The reserve study provides the information the association needs to make informed decisions in their budget making process. First, the reserve study will indicate if they need to increase, or if they can possibly decrease, the amount they contribute to their reserves each year. Second, the study may indicate deteriorated conditions of a common component, so they may need to increase maintenance costs. The study may indicate that they need to paint more often; or maybe their asphalt needs to be replaced soon, so there is no need to spend money on sealcoating next year.

Besides helping the association be successful in creating a solid budget,

the reserve study will quite often predict an upcoming perfect storm. As the saying goes, “timing is everything.” The perfect storm may be brewing financially, but without a reserve study, the association may not see it coming, or understand the potential impact. Quite often, the board may not realize that their biggest expenses are coming due all at the same time. I can think of many examples of properties that were built during the most recent real estate boom in the late nineties and early two thousands. Those properties are now looking at not only parking lot

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