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Reserve studies may not be the most exciting topic—but they are one of the most important tools a board can use to protect a community’s long-term financial health.
As Andrew Stoltenberg of Reserve Advisors explains, a reserve study isn’t just a report. It’s a roadmap that helps boards plan responsibly, avoid costly surprises, and reduce reliance on special assessments.
What Is a Reserve Study, Really?
At its core, a reserve study is:
- A capital expenditure plan that identifies when common-area components will need to be repaired or replaced
- Paired with a funding plan that shows how much money the association should set aside each year
Together, these plans help boards execute projects on time—without scrambling for loans or issuing special assessments.
What Happens When the Funding Plan Isn’t Followed
When a community doesn’t follow its reserve funding plan, one of two things usually happens:
- Projects get deferred, often leading to higher costs later
- Supplemental funding becomes necessary, such as loans or special assessments
Neither option is ideal, and both place additional strain on homeowners and boards.
Understanding the Limits of Forecasts
Most reserve studies are prepared by professionals with a Reserve Specialist designation, which means they’re qualified to build long-term forecasts.
That said, a reserve study is still a forecast—not a crystal ball.
As Andrew notes, forecasts are inherently imperfect. They’re based on assumptions that will change over time, which is why reserve studies must be reviewed, understood, and updated regularly.
Three Key Factors That Affect Every Reserve Study
1. Inflation
Inflation has a major impact on reserve funding. Replacement costs estimated today will almost certainly change over a 30-year period. Even small shifts in inflation can significantly alter funding needs over time.
2. Insufficient Repairs
This is one of the most common challenges communities face.
When repairs are deferred—whether due to budget constraints or inattention to the capital plan—the result is often higher costs later. Deferred maintenance doesn’t go away; it usually becomes more expensive.
3. Misunderstanding the Reserve Study
Many communities have a reserve study but don’t fully understand how to use it.
The solution is simple:
Lean on the professional who prepared the study. Ask questions. Understand the recommendations. Use the study as an active planning tool—not a document that sits on a shelf.
Reserve Studies Have a Shelf Life
While a reserve study may look 30 years ahead, it realistically has about a three-year shelf life.
Communities change. Costs change. Priorities shift.
That’s why boards should revisit their reserve study every few years, update it as needed, and use it as a guide for near-term decision-making.
Protecting Your Biggest Investment
For most homeowners, their property is their largest investment. A well-maintained, properly funded community protects that value over time.
Reserve studies help boards:
- Plan responsibly
- Reduce financial surprises
- Maintain common areas proactively
- Build confidence with homeowners
To learn more about reserve studies and how they support long-term planning, visit ReserveAdvisors.com.
