Mission Controls

Reserve Study Variables

There is a heck of a lot of variables when putting together a reserve budget.   Some of these include:

  • Learning to Use the Software
  • Learning Terms, Formulas and Methodologies
  • Component Project Useful Life
  • Component Remaining Useful Life
  • Component Project Costs
  • Inflation of Costs
  • Contribution Rate
  • Contribution Rate Percent Increase
  • Tax Rates
  • Interest Rate / Investment Returns

This can seem overwhelming and intimidating to most who take on the task of tackling a reserve budget. But… have no fear We are here….

We have done this process thousands of times in the past and have a process in place to not only create a reliable document to make more informed reserve budget decisions on but complete it in a timely manner (usually 1-2 weeks). Let us turn the dials, punch the numbers, adjust the trim, top off the tank and begin the countdown. You can just strap in for the ride… 

It has been our experience that most reserve accounts simply never get on a decent trajectory from the get-go. Doomed for failure and rarely with a plan that is stuck to for any significant period of time.

I like to ask people how you save for a new Rocket if you don’t know how much it costs and when you need to buy it… The answer is simply… You Don’t… Savings for Rockets, Ferraris or Roofs have little success without the knowledge and determination of putting together a financial plan and sticking to it.

When we create funding models we consider where the community reserve account is now, financially speaking, and where it not only needs to be but where you the Client would like it to be. Some communities would like to reach a high level of percent funded in short period of time (lower risk) while another may enjoy the benefit of having lower dues (but live a bit on the edge with a higher risk of having to rely special assessments down the road). Typically, we like to see funding model trajectories that consider the following principles:


  • The funding trajectory is as smooth as possible… Nobody likes turbulence… Reserve projects are notoriously irregular and are typically the more expensive projects in a community (e.g., asphalt, roofing, paint, irrigation piping, plumbing, tree care, etc.). It's necessary to plan for them years and often decades in advance.  
  • The funding model is fair to members over time (e.g., no one group is paying significantly more or less than their fair share in the way of special assessments or a higher/lower percent if not accounting for inflation)
  • Money will be available when needed. "What is a budget? A mathematical confirmation of your suspicions." ~ A.A. Latimer ~

Whatever the goal is, there is going to be a funding trajectory to meet that goal…. Sticking to it means success... or failure...          


Your Trajectory

Reserve Budget


Staying In Orbit


The view up there will be amazing…. You will be the envy of many once you get to a position of reaching an adequate orbit – no crashing and burning and no spiraling off into space… But guess what? The trip isn’t over yet…. Maintaining an adequate orbit is also needed for long term reserve budgeting.


Remember that giant rocket that got you into space well there are small rockets to keep you up there; always making small and typically very tolerable adjustments. There will undoubtable be unpredictable and unplanned factors when budgeting for reserves:


  • Periods of high inflation  -  the current time period is a great example of this.
  • Economic downturns –  during which times raising dues will be difficult.
  • Components that do not last as long as predicted, poor installation, poor maintenance, weather, geographical factors, etc.
  • High use by membership – (e.g., pools, recreation centers).
  • Vandalism, etc., etc., etc.


The benefit of reaching a high enough orbit that your community is considered to be well funded is that these unpredictable and unplanned factors typically only have a modest impact on things. No need to go back to the hangar, just hit that booster rocket to move a little this way move a little that way… just another day at the office.

Conversely a community that never reaches an adequate orbit and is always battling to get there will also encounter these unpredictable/unplanned factors but will usually have to rely on special assessments, loans or deferring projects to deal with them. This is why it’s considered high risk to remain at a low level of funding for a long period of time. Constantly going back to the hangar and never seeing the show…