When you look at the risks and contingencies of getting involved in real estate, it is important to note that a reserve analysis plays a very pertinent role. Whenever you become a homeowner, one of the undoubted roles that you enter into is that of a member of the local HOA or homeowners association. This is the community association which with the help of a governing board looks into the repair, replacement and maintenance of the vicinity under the control of the association.

They are liable to ensure that a reserve study is conducted in due time in order to ensure compliance with the land norms of the state. A reserve analysis comprises a physical analysis of the land in order to gain information and consequentially decide the amount that the HOA will require to put away as a reserve. A reserve analysis essentially helps an HOA understand how much is enough for them to successfully maintain their neighborhood as well as an average timeline, life expectancy of common elements.

Now, when the reserve analysis examines and analyses all data on the average life of elements, a basic cost for repair and replacement of them as well as the period for which such a forecast has been made. Further, the analysis will help calculate the contributions required by each member on a monthly, annually or semi-annual basis.

Let us look at some of the benefits of a reserve analysis when it comes to real estate:


Fiduciary assistance- Now, when a homeowners’ association elects a board to govern the association, in itself it is a bigger responsibility than any one individual member could undertake. This is why every year or every few years, a board is chosen so as to take up the responsibilities of the association collectively upon themselves.

In doing so, the board takes up a larger responsibility, i.e., ensuring that the reserve that has been set aside in order to repair and replace components as and when required is sufficient. A professionally conducted reserve analysis makes this fiduciary responsibility much easier.


Assurance- When we buy homes, the contingency of the losses that we may incur is too high for us to overlook. For this reason, we may often hesitate to buy and often prefer to rent or lease. For real estate brokers or agencies, this is somewhat inconvenient and can be the one bone of contention between them and the clients before the sale.
An HOA that conducts its reserve analysis well in time can be an attractive option for customers looking since the more the members, the lesser the contribution one has to make to a reserve.

Taxation and legal compliance- Further, the law of American states makes it compulsory for an HOA to have conducted a timely reserve analysis. This is not something that can be skipped on for longer periods of time simply because the forecast includes the distant future.
In order to ensure compliance with state regulations and federal taxation structure, an analysis is imperative.

Financial health of the HOA- A reserve analysis that has been well incorporated into the HOA budget will ensure that the financial health of the association is well-maintained. This will appeal to renters and insurance companies alike which will mean more and more members.
The reserve analysis will pay for itself when it brings more contributors in with time.

All real estate owner, HOAs and HOA boards must sanction a reserve analysis today with companies like  Facilities Advisors Inc.
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