What is an HOA Reserve Study?
If you’re on the board of a homeowners association, you know part of the job is keeping shared areas like roads, roofs, fences, and pools in good shape. Just as important is making sure the HOA has enough money set aside for major repairs. That’s where a reserve study comes in.
Without a reserve study, communities risk falling behind, leading to special assessments or sudden dues increases.
So, What Exactly Is a Reserve Study?
A reserve study is a two-part analysis:
- Physical review of major common assets (e.g., roofing, pavement, pools)
- Financial analysis of your HOA’s reserve fund
The goal? Be financially prepared for major expenses, without last-minute fee hikes.
How Much Does It Cost?
Pricing depends on scope and whether a site visit is included:
- Level III (Update Only): $400–$600
- Level II (Update + Site Visit): Higher mid-range
- Level I (Full): $1,200–$1,800+
It may seem like a lot up front, but compared to unexpected special assessments, it’s a smart investment.
How Often Should You Do One?
It varies by state, but regular updates are best.
In California:
- HOAs must update the study annually
- A full, on-site version is required every three years
Elsewhere, best practice is to:
- Review your reserve study every few years
- Update estimates regularly to reflect inflation and wear
Even if not required, it’s a proactive way to avoid surprises.
Why Reserve Studies Really Matter
A well-done reserve study helps your board:
It also builds trust. When residents ask where their dues go, you’ll have clear, data-backed answers.
Who Should Conduct Your Study?
Most HOAs hire a certified reserve specialist to:
- Inspect infrastructure
- Analyze financials
- Recommend a practical funding plan
For small HOAs, a DIY option may be tempting, but hiring a professional ensures accuracy and reduces risk.
Pro Tip: Schedule your reserve study several months before your annual budgeting process so the board can incorporate the findings in time.
Final Thoughts: Don’t Skip It
A reserve study is about more than just finances, it’s about protecting your community’s future. It prevents last-minute stress, keeps your neighborhood looking good, and helps ensure every dollar is being used wisely.
If your association hasn’t reviewed its reserves in a while, now’s the time. Partnering with the right professionals can take the guesswork out of the process and help your HOA stay strong for years to come.
Key Definitions that might help:
HOA Reserve Study: A financial planning tool used by homeowners associations to assess future repair and replacement costs for major components and determine how much money to set aside annually.
Reserve Fund: The savings account used to pay for large, long-term expenses such as roof replacements, repaving, or structural repairs.
Component Inventory: A detailed list of all common area assets (e.g., roofs, fences, pavement) that the HOA is responsible for maintaining or replacing.
Useful Life: The estimated number of years a component is expected to last before it needs major repair or replacement.
Remaining Life: How many years are left before a specific component will need to be repaired or replaced.
Replacement Cost: The estimated cost to repair or replace a component at today’s prices.
Percent Funded: A measure of how well the HOA’s current reserves match the estimated future costs. A higher percentage funded indicates stronger financial health.
Funding Plan: A schedule or strategy for how much money the HOA should contribute annually to the reserve fund to stay on track.
Special Assessment: A one-time fee charged to homeowners when the reserve fund is insufficient to cover a major repair.
