Helpful advice

The Reserve Fund
Funds should be put aside into a reserve fund each year. The money is saved for major repairs such as roof replacement. Although such repairs may not need to be done for 20-25 years after the buildings have been built, the condominium association should have the funds on hand to pay for such repairs when the need arises. If that is not done large assessments to each homeowner will be needed. Planning in advance will eliminate the need for assessments.

Long Range Budget
It is advantageous to have a budget of income and expenses projected ten to fifteen years ahead. The main reason is to insure that adequate money is being put into reserves each year to cover long term maintenance needs. The board treasurer and the property manager should work together to create and update this budget.

Condominium Insurance
Association boards have a responsibility to members to inform them of what the master insurance policy covers and does not cover. Association property owners should understand that they too have to have coverage for their unit. Knowing what coverage they need is very important.

Investing The Reserve Fund
Association boards should consider where to put the reserve money to work. In most cases those funds will sit untouched for a long time. Leaving it in a money market may not make sense. Any interest over $100.00 from a money market is taxed at a fairly high rate. Money invested in funds, for instance, will not be taxed until a gain is realized. A conversation with a financial adviser is highly recommended.

Increasing Property Value
With the help of the property manager the board should look at ways to increase unit values other than real estate appreciation. Consider landscaping upgrades, better use of common land and building exterior improvement, for example. Owners want to know that their unit, should they decide to sell, will be appealing to prospective buyers. A lot of thought should go into this area.