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Reserve Studies

How to plan, build, and update reserve studies in SmartProperty.

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Frequently asked questions

How are the Contributing Reserves Calculated?

Each Funding Plan type arrives at its own Annual Reserve Contributions figure differently. A Current Funding plan uses the contribution amount and the Rate of Annual Reserve Contribution Increases entered directly on that plan. A Threshold or Targeted Funding plan calculates the contribution needed instead, either to keep the reserve balance above a chosen minimum or to reach a target percent funded by a chosen year. A Ladder Funding plan uses a separate contribution amount, increase rate, and duration for each step you add, so the figure can change at set points across the plan. See Set your financial assumptions for the property level starting balance and rates a plan can draw from.

What does the SmartProperty Dashboard Include?

The Dashboard opens to a Key Insights summary: your reserve account balance, contributions to reserves, and anticipated expenditures for the year. Below that, it shows your percent funded figure with a gauge and a link to the full Percent Funded Report, a list of the year's top anticipated expenditures, and a chart of your total replacement cost broken down by category with a link to the Component Inventory Report. A funding chart then projects your reserve balance for the next 5 to 30 years based on your current funding plan, with a link to open that Funding Plan directly. What you see depends on the fiscal year selected at the top of the screen: a future year shows projected starting balances and lets you compare funding plans instead of the current-year summary. To request a reserve study proposal from SmartProperty, select "Request a Reserve Study Proposal" at the top right of the Dashboard, across from your property name. This opens the reserve study proposal page in a new browser tab.

What is a reserve study?

A reserve study is a long-term capital planning tool for an association. The study lists the major components the association must repair or replace, such as roofs, elevators, paving, mechanical systems and pools. For each component, the study estimates the Remaining Useful Life and the replacement cost. The study then calculates how much the association needs to set aside each year to pay for those replacements without a special assessment. See What a reserve study is and what it tells you for where each part of a reserve study appears in SmartProperty.

Why does an association need a reserve study?

A reserve study protects owners from unexpected special assessments and protects the long-term value of the property. Without a study, a board has no reliable basis for how much to collect for reserves. Underfunded reserves are a common cause of deferred maintenance, emergency repairs and financial strain in associations. Many states also require associations to keep a current reserve study.

How often should a reserve study be updated?

Reserve professionals commonly recommend updating a reserve study every year, with a site visit at least every three years. Regular updates keep the funding plan accurate as component condition, inflation and replacement costs change. State law can set its own schedule.

What is the difference between a Level 1, Level 2 and Level 3 reserve study?

The levels follow the standards set by the Community Associations Institute (CAI).

  • A Level 1 full study builds the full component inventory from an on-site inspection. A Level 1 study is recommended for a first study, or when a long time has passed since the last full study.
  • A Level 2 update revises an existing study after a site visit to observe component condition.
  • A Level 3 update revises cost and Useful Life estimates and the funding plan without a site visit.

SmartProperty records each study on "Reserve Study History" as one of four types: "Level 1: Full Reserve Study", "Level 2: Reserve Study Update", "Level 3: Financial Update" and "Level 4: Pre-Construction Reserve Study". An "Inspection Date" is recorded for Level 1 studies.

What is capital planning for an association?

Capital planning identifies, schedules and funds the major repairs and replacements an association faces over a long horizon, typically 20 to 30 years. Capital planning goes beyond a reserve study. A capital plan connects reserve fund projections with project scheduling, cash flow and board decisions. A capital plan answers three questions: what needs to be replaced and when, what the work will cost, and how the association will pay for the work without a special assessment.

What is the difference between a reserve study and a capital plan?

A reserve study is the analytical foundation. The study lists components, assesses their condition, estimates replacement cost and timing, and calculates the annual reserve contribution needed. A capital plan builds on the study. The plan sets which projects come first, models funding scenarios, manages cash flow year by year and shapes how the board explains the plan to owners. The reserve study states what the association needs and what it costs. The capital plan states how the association will fund and carry out the work.

What is a Living Reserve Study, and how is it different from a traditional reserve study?

A traditional reserve study is a document that describes the property at one point in time, and the figures age from the day the document is delivered. A Living Reserve Study keeps your reserve study in SmartProperty, where components, funding plans and reports draw on the same data. The board works from current figures throughout the year, not only at budget season. The LRS Report is the Living Reserve Study report: the bundled reserve study report distributed to board members ahead of a board meeting.