Services

The reserve study consists of two parts

  • The Physical Analysis
    • The portion of the reserve study where the component inventory, condition assessment, and life and valuation estimate tasks are performed. This represents one of the two parts of the reserve study.
  • The Financial Analysis
    • The portion of a reserve study where the current status of the reserves (measured as cash or percent funded) and a recommended reserve contribution rate (reserve funding plan) are derived, and the projected reserve income and expense over time is presented. The financial analysis is one of the two parts of a reserve study.

There are two Funding Methods

  • Component/Straight Line Method
    • The portion of a reserve study where the current status of the reserves (measured as cash or percent funded) and a recommended reserve contribution rate (reserve funding plan) are derived, and the projected reserve income and expense over time is presented. The financial analysis is one of the two parts of a reserve study.
  • Cashflow Method
    • A method of developing a reserve funding plan where contributions to the reserve fund are designed to offset the variable annual expenditures from the reserve fund. Different reserve funding plans are tested against the anticipated schedule of reserve expenses until the desired funding goal is achieved.

There are four Funding Plans

  • Full Funding
    • Setting a reserve funding goal to attain and maintain cumulative reserves at or near 100% funded. (The 100% funding level is based upon the Component Method of funding requirement calculated in this Study on the Component Inventory List page.
  • Threshold Funding
    • Establishing a reserve funding goal of keeping the reserve balance above a specified dollar or percent funded amount. (This Study utilizes the Component Method Annual Reserve Contribution as the dollar amount the reserve balance will not fall below in any one year.
  • Baseline Funding
    • Establishing a reserve funding goal of keeping the reserve cash balance above zero. (We do not recommend this Funding Plan, although considered an accepted funding plan by CAI, as we feel it does not allow for any unexpected or unplanned expenses over the 30 year projected funding period.
  • Statutory Funding
    • Establishing a reserve funding goal of setting aside the specific minimum amount of reserve of component required by state or local statutes. ( In Nevada, the Statutory Funding Requirement is that the reserve fund be sufficient and adequate.

Reserve Study Formats

  • Full Reserve Study
      1. Preparation of a Major Common Element Component Inventory in conjunction with governing documents and State Statutes
      2. Determine Component Condition based upon an on-site visual observation
      3. Determine the Use Life, Remaining Use Life
      4. Determine the Valuation Estimates of Repair or Replacement
      5. Determine current reserve account balance and budget projections
      6. Determine current reserve account earned interest rates and inflation factors
      7. Test the Current Fund Status and other Funding Plan using the Cash Flow Method
      8. Develop and recommend a practical Funding Plan

    These Studies address the normal deterioration of properly built and installed components with a predictable life expectancy. Catastrophic or events beyond reasonable predictability are not considered as a depreciable factor in this report.

  • On Site Update & Review Study
      1. Assess each reserve component’s condition based upon an on-site visual observation
      2. Adjust the Use Life, Remaining Use Life as needed based upon visual inspection
      3. Adjust Valuation Estimates of Repair or Replacement to current costs
      4. Update current reserve account balance and budget projections
      5. Update current reserve account earned interest rates and inflation factors
      6. Test the Current Fund Status and other Funding Plan using the Cash Flow Method
      7. Develop and recommend a practical Funding Plan

    These Studies address the normal deterioration of properly built and installed components with a predictable life expectancy. Catastrophic or events beyond reasonable predictability are not considered as a depreciable factor in this report.

  • Off Site Update & Review Study
      1. Adjust depreciation periods of the Use Life, Remaining Use Life
      2. Adjust Valuation Estimates of Repair or Replacement to current costs
      3. Update current reserve account balance and budget projections
      4. Update current reserve account earned interest rates and inflation factors
      5. Test the Current Fund Status and other Funding Plan using the Cash Flow Method
      6. Develop and recommend a practical Funding Plan

    These Studies address the normal deterioration of properly built and installed components with a predictable life expectancy. Catastrophic or events beyond reasonable predictability are not considered as a depreciable factor in this report.

  • Pre-Construction Reserve Study
      1. Preparation of a Major Common Element Component Inventory using site plans and governing documents
      2. Estimate the Use Life, Remaining Use Life
      3. Estimate the Valuation Estimates of Repair or Replacement
      4. Estimate reserve account balance and budget projections
      5. Estimate current reserve account earned interest rates and inflation factors
      6. Prepare a Full Funding Plan using the Cash Flow Method

    Note: This type of study is designed for development budget planning at the outset of construction. A Full Study should be prepared at or near Developer Transition to the Unit Owners.

    These Studies address the normal deterioration of properly built and installed components with a predictable life expectancy. Catastrophic or events beyond reasonable predictability are not considered as a depreciable factor in this report.