Reserve Fund Study in Simple Terms
Reserve Fund Study
A reserve fund study is prepared to assist owners of a building in determining the appropriate amount for the annual contribution to the contingency fund of a building which estimates the repair and replacement cost of assets located within the common areas such as:
• Exterior building envelope (cladding, epoxy paint, render).
• Windows and frames
• HVAC systems & Plant and Machinery
• Common electrical systems
Our professionally qualified surveyors offer an accurate and detailed reserve fund study service to property owners for various reasons including:
· Developing a stable and reasonable funding plan that meets their needs and future owners;
· Identifying the multi-year contributions required to cover future replacement costs and
· Providing knowledge of the service life and projected replacement cost of the assets.
Our reserve fund study will include the following:
· Cash flow balance sheet
· Expenditure and Contributions
· Forecast of sinking fund costs upto a period of 20 Years
· Proposed contribution
Who needs it?
• Developers/ Property Management companies
• Building owners
• Owners associations
Questions: When should an owners association or community management request for a reserve fund study? Is it too early to request for a reserve fund study for newly constructed building recently handed over to the owners by the developer?
I am looking forward to a live debate or responses from connections in owners associations, community managements, asset management, other real estate industry and the public.
By: Ruka Jesinawu
Ruka Jesinawu works at Land Sterling with the Building Surveying department and together undertook numerous reserve fund studies for various owners associations and master community managements.