Reserve Fund Planning – Not as Simple as it Seems

The article discusses the complexities and challenges of reserve fund planning for condominiums. It emphasizes that many condominiums, especially those less than ten years old, are underfunding their reserves, posing financial risks in the long term. The current minimum requirement for reserve funds (10% of the operating budget) is considered inadequate, and most new condominiums need a steep increase in reserve fund contributions. The article highlights various factors that contribute to underfunding, such as the length of phase-ins, exponential increases, and market changes affecting costs. To ensure financial success in the future, the article suggests increasing contributions, considering longer data analysis periods, accounting for building-specific challenges, and avoiding prolonged phase-ins.