homeowner association reserve study

At zumBrunnen, we specialize in conducting reserve studies for HOAs. Our team consists of seasoned experts who possess a wealth of knowledge, experience, and understanding of the construction and facilities of these communities. Our reserve studies have been praised for their thoroughness and have helped numerous HOAs make informed decisions regarding capital replacements. Our proven track record speaks for itself.

Reserve Studies for Neighborhood HOAs

For more than 33 years, zumBrunnen has completed HOA reserve studies to help clients better understand their current and future capital needs. Our reserve studies provide an evaluation of the facilities, condition of the neighborhood, and a detailed analysis of the funding needed for future capital replacements. With our reserve studies, HOAs can make informed decisions about their reserves, enabling them to better plan for the future and ensure proactive asset management.

Two employees on-site discussing the construction needs for an HOA reserve study.

About Reserve Study

A reserve study is a tool enabling property managers to make informed long-term decisions. It involves evaluating all capital assets and designating replacement costs and future replacement dates. The study generates a detailed replacement schedule, enabling investors and property management teams to make knowledgeable choices and proactively prepare for the HOA’s future.

HOA Reserve Study Workflow with zumBrunnen

From initial consultation to the implementation of recommendations, homeowners’ associations will gain insight into how Zumbrunnen efficiently navigates through data collection, analysis, and strategic planning to ensure optimal reserve fund management and long-term property value preservation. Through clear communication and collaborative efforts, associations can confidently embark on this journey towards informed decision-making and enhanced community sustainability. Here’s how it would go

  1. HOA representative provides detailed property information and/or characteristics to zumBrunnen for consideration. This is typically done through a fillable .pdf info intake form.
  2. zumBrunnen proposes a scope and fee based on the info provided.
  3. HOA representative signs the proposal/contract.
  4. zumBrunnen assigns the project to an internal project manager.
  5. The Project Manager contacts the HOA representative and schedules a site visit.
  6. The Project Manager conducts a site visit to catalog and evaluate assets under the purview of the homeowner’s association.
  7. The Project Manager builds a 20-year capital replacement forecast informed by data collected in the site visit.
  8. The Project Manager provides a draft copy of the 20-year forecast to the HOA.
  9. The HOA reviews the draft and submits feedback/comments to zumBrunnen.
  10. zumBrunnen’s Project Manager incorporates the HOA’s comments, then produces a final report including the final 20-year forecast with Funding models and narrative.

Contact zumBrunnen to do a Reserve Study for Your HOA

For reliable and expert guidance on your neighborhood’s HOA reserve study, turn to zumBrunnen. Our highly dedicated team of professionals boasts over three decades of experience in the field and is committed to delivering exceptional service. We understand the importance of precise reserve studies, and our team will work tirelessly to provide you with the best possible outcomes. Reach out to zumBrunnen now and let us assist you in making informed decisions for your HOA.

More About HOA Reserve Study

We recognize that neighborhood HOAs have unique financial constraints, and are dedicated to fulfilling those needs through our thorough and straightforward reserve study reports. Our team of knowledgeable project managers is always on hand to offer personalized guidance and support throughout the entire process.

Your Neighborhood HOA’s #1 Choice for Reserve Study

Save More Time and Money for Your Neighborhood’s HOA with A Reserve Study

Our HOA reserve study services combine a systematic process with essential tools to forecast the future capital requirements of an HOA over its useful life. Our user-friendly capital reserve study solution, powered by zumBrunnen’s proprietary FacilityForecast® software, offers the ability to customize data in various ways. This includes adjusting inflation rates, interest rates, terms in years, filtering or combining budgets, cost categories, budget item classifications, setting minimum unit cost values, and calculating facility condition indices.

HOA Reserve Study Funding Plan Descriptions

Current Funding Plan

The Current Funding Plan reports from zumBrunnen will review the client’s current reserve fund balance and historical or planned annual reserve contributions. These reports provide a complete overview of the fund balance and planned contributions.

Funding Plan Line Chart Example:
This report displays a line chart of the client’s Current Funding Plan, showcasing their annual contribution, capital expenses, and reserve balance for each year of the specified reporting term. It also highlights any potential funding gaps in the client’s current funding strategy.

Funding Plan Table Example:
This report assesses the effectiveness of the Current Funding Plan in light of projected capital expenses. It presents data such as the necessary fully funded balance, actual reserve balance, percent funded, current plan annual contributions, interest income, capital expenses, and the funding requirement on a per-unit, per-year, and per-month basis. The aim of this report is to identify any years where the Current Funding Plan may fall short.

Summary:
This plan illustrates the current status if the 20-year budget is followed and there are no changes to the planned contribution for the current year. It presents the client’s financial position at the end of each year over the next 30 years.

example of an HOA reserve study current funding plan
example of a current funding plan HOA reserve study zumbrunnen inc
example of an HOA reserve study fully funded plan
an example of a fully funded funding plan HOA reserve study zumbrunnen inc

Fully Funded Plan

In the early 1980s, the HUD introduced the Fully Funded Plan Component Method which necessitates the creation of separate funding accounts for each component, calculated over its lifespan. For existing properties, it requires a ramped up funding plan to finance both the remaining lifespan of components and the future replacements. In case of a budget deficit, supplementary funding can be obtained through savings or a special assessment. Properties that are not new will require higher initial contributions, but will benefit from a more prudent reserve balance compared to the Baseline and Threshold Funding Plans.

The Fully Funded Plan Bar Graph:
A bar graph is provided that depicts the annual contributions, capital expenses, and estimated reserve balance of the Fully Funded Plan, represented by the National Register of State and Societal Services.

The Fully Funded Plan Table:
The aim of the Fully Funded Plan is to secure funding for at least 99% of accumulated depreciation. The report highlights the yearly specifics such as the required NRSS balance, reserve balance, degree of funding, yearly NRSS contributions, interest income, capital expenses, and contributions computed on a per-unit, per-year, and per-month basis.

Summary:
The Fully Funded Plan is designed to achieve funding for more than 99% of the accumulated depreciation of properties older than a year. It will necessitate larger initial contributions than the Baseline and Threshold Funding Plans, but will result in a more conservative reserve balance.

Baseline Funding Plan

The Baseline Funding Plan is designed to ensure that the reserve balance does not fall below zero dollars over the Reserve Term. This is achieved by determining the minimum required yearly contributions based on predicted expenses, including the years with the highest expenses during the Reserve Term.

Funding Plan Line Chart Example:
Depicts the annual necessary NRSS contributions, capital costs, and reserve balance in a line graph format.

Funding Plan Table Example:
Provides a detailed overview of the necessary NRSS fully funded balance, reserve balance, percent funded, necessary annual contributions, interest income, capital expenses, and contributions on a per-unit, per-year and per-month basis for each year.

It’s important to note that the Baseline Funding Plan only ensures sufficient reserve funds for the Reserve Term years. The annual contributions may decrease after the first critical year, unless there is only one critical year in the last year of the Reserve Term. However, if there are multiple critical years, the annual contributions may decrease to prevent the Reserve Fund from exceeding the necessary balance. Additionally, extending the Reserve Term may result in an increase in annual contributions.

Summary:
In summary, the Baseline Funding Plan adjusts the annual contributions to ensure that the reserve fund remains at or above zero dollars.

example of an HOA reserve study baseline funding plan
a baseline funding plan HOA reserve study zumbrunnen inc
example of an HOA reserve study threshold funding plan
example of an HOA reserve study threshold funding plan

Threshold Funding Plan

The consultant suggests that the client incorporate a contingency, which is a minimum reserve threshold, into the Baseline Funding Plan to avoid deferring critical replacements and reducing the risk of special assessments. This threshold is a recommendation made by the Consultant based on his expertise and the property owner’s/manager’s risk tolerance.

The Threshold Funding Plan is the Baseline Funding Plan with the minimum reserve balance of $0 increased by the threshold amount, which is adjusted for inflation. The threshold amount is calculated by taking the threshold percentage of the total replacement cost of all capital expenses. It is important to note that the Fully Funded or Baseline Funding Plans may not account for unexpected expenses, variations in pricing, life cycles, and other factors that are beyond the control of the consultant.

Funding Plan Bar Graph Example:
A bar graph displays the yearly NRSS contributions, capital expenses, and reserve balance for each year of the Threshold Funding Plan.

Funding Plan Table Example:
The report will detail the necessary fully funded balance according to depreciation schedules, the actual reserve balance, the degree of funding, the annual NRSS contributions based on critical year amortization with the addition of the threshold amount, interest income, capital expenses, and the annual contributions calculated per-unit, per-year and per-month.

Summary:
This plan outlines the yearly contributions required to maintain the reserve fund at or above a minimum balance, which is equal to a pre-determined percentage of the total cost of all items in the capital budget.

HOA Reserve Study FAQ’s:

Many property owners have been caught off guard by the sudden breakdown of HVAC systems or leaks in roofs during heavy rain, leading to unexpected and costly repairs. To avoid these scenarios, it’s important to plan for future replacements of key assets through careful evaluation and cataloging. By reserving funds over the long term, property owners can minimize the risk of surprises and ensure they have the resources they need to address any problems before they become emergencies.

Performing a reserve study regularly, every 3-5 years, is crucial for keeping the assets in good condition and ensuring that the reserve fund is sufficient to cover any upcoming repairs or replacements. The frequency of the reserve study depends on the scale and intricacy of the property. Regular reserve studies enable you to plan ahead and stay on top of maintenance needs, providing peace of mind and avoiding unexpected costs in the future.

A reserve study can offer valuable information on the status of your community’s assets, allowing you to make informed choices for the future. To maximize the benefits of a reserve study, it is important to prepare all necessary data in advance and ask relevant questions. Once the study is completed, it is crucial to review the results and devise a strategy to address any discovered problems.

Reserve Study Clients

  • greystone
  • ziegler
  • hjsims
  • beacon-1
  • woodward
  • covenant
  • grayco
  • kennesaw-state-university
  • fiftythirdbank1
  • abhow

zumBrunnen provides great value to its clients – knowledge, expertise, client service, willingness to work together, all at a reasonable price. They can speak both the construction language and the finance language – which is an invaluable asset!

Kenda Laughey
CFO - Southminster

Your Trusted HOA Reserve Study Partner

At zumBrunnen, we bring extensive expertise to the table when it comes to reserve studies for neighborhood HOAs. With over 30 years of experience in the industry, we are able to identify potential blind spots and provide valuable insight. To further streamline the process, we have developed the FacilityForecast® Software, a comprehensive solution for managing and planning for long-term capital expenses and operating costs. The software features a user-friendly interface for easy expense forecasting, financial performance analysis, and report generation. Our dedicated team is also available to offer personalized support and guidance.