What to do with extra reserve money?

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  • #371550
    irvinec
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    I realize this is probably not a common “problem” but our property owner’s association reserves is more than 100& funded right now… so my question is, would it be wise to keep funding the reserves in case of an emergency or perhaps spend the money on improvements?

    #371551
    nychrisjohn
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    That’s certainly a good problem to have. Our HOA’s reserve fund is not fully funded (in fact, it is well below the 70% rule of thumb), so I envy you. That being said, as a former board member, I feel it best to keep funding the reserve fund at the rate you are going. You can never have too much money in your reserve fund, as I always say, because it will surely help you in a future unanticipated event. Plus, costs are rising (and don’t seem to be slowing down), so your over 100% funding may be just 90% in the future when inflation catches up.

    #371552
    irvinec
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    Thank you for your response, nychrisjohn! I also think it’s a good idea to keep funding it regardless of overfunding but some other people seem to think that it’s passive money that can be better used elsewhere. A new tennis court, better landscaping, and new signage have all been suggested thus far.

    #371553
    nychrisjohn
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    Do you really need those improvements right now? If not, best to delay. Prices aren’t exactly ideal currently.

    #371554
    tenten1977
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    Are you sure your over 100% funded? How long has it been since you updated your reserve study? I only ask because I don’t encounter a lot of associations with overfunded reserves.

    #371555
    irvinec
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    I think we updated it last year.

    #371556
    kris10xoxo
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    Has everyone forgotten what happened to Surfside? What a tragedy! After that, I don’t think you can ever really be “overfunded”… Keep funding, OP. Don’t be another Surfside

    #371557
    tenten1977
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    Have you checked your Bylaws? Maybe you’ll find guidance on what to do with extra reserve funds there.

    #371558
    irvinec
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    Nothing in our by-laws say anything about overfunding. I do agree that Surfside was a tragic circumstance but we are not a condominium and thus have fewer buildings to maintain overall.

    #371559
    lolitaQ
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    maybe you can consider lowering your assessments for a while. since you dont really need it?? or give a ‘free month’ or somethin.. just a thought

    #371560
    enginecore
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    JSYK OP, reserves are not for unancitipated or emergency costs. In fact, they serve the opposite purpose. Your reserves are for calculated expenditures that you know your POA will probably need to pay for in the future.

    #371561
    irvinec
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    Yes, but since we are over 100% funded, we were thinking the overage could just go towards a contingency fund.

    #371562
    enginecore
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    In that case, why not set up a separate account for contingnencies? Seems like you’re mixing funds here, which isn’t ideal.

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