How much money should a condo association have in reserves?

What Is The Maximum Amounts Our Condo Should Have In Reserves.
For prospective, and established investors, condominium property management is an excellent way of saving money.  Besides, you get to minimize your expenses as well as sustain your economic value through controlled maintenance of tremendous assets.  On the contrary, adopting poor management strategies for your condo assets will undoubtedly abate your condominium units. In emergency situations, your reserve funds can be used to save the critical situations.

You must be wondering how much cash your condo association reserves should hold in to help counter such unexpected crisis.  Ideally, there isn't any proven way of determining these values.  No worry though because there are specific factors that can help you estimate the average amounts.  They are numerous, but not limited to:

1. Your Reserve Account Balance.

This is the actual amount of money that should be left in your reserve account.  Factors which can determine the account balance in this case may include:
The total costs of capital projects which you plan for the next five years.  Optionally, it can be the next 25 years if you strictly abide by your reserve study recommendations.

1. Your condo level of assessment.

When budgeting for your operational expenses, it's desirable that the executive budget is increased each year to help in funding the reserves.  To determine this excess, you can check back into your five years capital plan with the reserve study. Optionally, it's important to subsidize your reserves with a minimum of 10 percent of your yearly assessment benefits.

1. A five-year capital plan.

Instead of going for a reserve study which could as well be time-consuming, you can have a proficient investor help you do a five-year capital plan.  This plan aims to assist your board in actuating the reserve amounts that will be required when funding your projects.

1. The functioning account balance.

Depending on your association's daily bills, the number of funds in your condo's operating account could vary widely.  This variation could also be experienced in your units. To assess the cash flow of a running account, you could do a one-month assessment of the report.

1. Reserve Study.

This is a complete report which gives your condo actionable tips on the amounts you may need to fund reserves.  As opposed to a five-year capital plan, it takes longer to complete. On average it should take twenty-five years.  It's recommended because it's more accurate, and also takes into account several factors.

Conclusion.
To conclude, the success of any investment is dependent on proper communication.  As a team leader in your condominium association, it's critical always to remember to give on-time and transparent communications to the homeowners.  To ensure these homeowners are informed early, make it a trend adequately noticing them on your association's meetings.

Besides, embrace proactive planning for all your projects.  It's a grand strategy if you are looking to spend little money when initiating projects. Finally, after notifying the homeowners, ensure all your meetings abide by the IL Condo Act.