Hidden Financial Risks in Your Association Budget

When “stable” budgets hide unstable realities

Most condo and HOA boards are proud to keep budgets balanced and fees stable. But here’s the part that too often gets missed — the reserve fund. That’s the money set aside for long-term repairs like roofing, paving, siding, and major mechanical systems.

When reserves aren’t properly funded, it can create a false sense of security. Everything looks fine on paper — until a big project comes due. Then come the special assessments, emergency loans, and strained relationships between neighbors. I’ve seen it happen more than once, and it’s not a situation any board wants to be in.

What a reserve study really shows you

A reserve study is simply a planning tool. It looks at every major common element — roofs, pavement, siding, mechanical systems — and projects when those items will need replacement and how much it will cost.

The goal is to determine whether the association is setting aside enough each year to stay “fully funded.” Many boards are shocked to learn how far behind they actually are once a professional study — or even a quick preliminary ReserveScan™ estimate — puts the numbers on the table.

The chain reaction of underfunding

Underfunded reserves don’t just lead to financial stress — they change how a community looks and operates.
When reserves are too low:

• Maintenance gets delayed, which accelerates deterioration.

• Special assessments become necessary, creating hardship for owners.

• Property values start to slip as the property’s appearance declines.

• Insurance premiums go up — or coverage is denied altogether.

Associations that plan ahead, on the other hand, protect both their buildings and their owners’ investments. They maintain predictable fees and avoid the panic that comes with emergencies.

The 70% funding rule of thumb

Professionals generally consider an association “strong” when it’s around 70% funded — meaning it has 70% of what it needs to cover expected long-term repairs. Once reserves drop below 30%, the risk of special assessments climbs sharply.

ReserveScan™ gives boards a fast, affordable way to estimate where they stand without committing to the cost and delay of a full reserve study. It’s a reality check that helps boards make smart adjustments before they find themselves in crisis mode.

Catching problems before they catch you

ReserveScan™ uses a blend of data, photos, and verified national cost tables to deliver an early snapshot of an association’s reserve health. It’s ideal before budgeting season or when you’re trying to decide whether a full engineering study is necessary.

Identifying a funding shortfall early allows you to make small, manageable adjustments now — rather than large, painful ones later.

Protect your association before surprises happen.
Visit ReserveScan.com and schedule your preliminary reserve estimate today. In just a few days, you’ll know where your reserve fund stands — and how to plan with confidence.