Question:
What would be the appropriate cash reserve to maintain for a HOA monthly operating expenses. We have existing reserves for everything else.ie deferred maintenance , roofs, painting ect.
– Michael
Answer:
Hi Michael,
The operating budget/fund is different from the reserve fund. The operating fund is used for operating expenses, which are expenses that occur on a more regular basis. In comparison, the reserve fund is typically used to cover the cost of future repairs, replacements, and maintenance for major components. You may learn more about the differences here. You may also find the following articles helpful:
What Are HOA Reserve Funds For?
Should Homeowners Contribute to HOA Reserves? Why Or Why Not?
To understand how much you should have in your reserves, it is best to hire a professional to conduct a reserve study.
If you are referring to your operating budget, you may determine how much you should have in your operating fund by calculating anticipated expenses. You may find the following articles helpful when planning your budget:
How To Plan For Your HOA Budget
HOA Budget Best Practices Every Board Member Should Know
Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.
