A Reserve Study is made up of two parts
1) the information about the physical status and repair/ replacement cost of the major common area components the association is obligated to maintain (Physical Analysis); and
2) the evaluation and analysis of the association’s Reserve balance, income, and expenses (Financial Analysis).
The Physical Analysis is comprised of the Component Inventory, Condition Assessment
, and Life and Valuation Estimates. The Component Inventory should be relatively “stable” from year to year, while the Condition Assessment and Life and Valuation Estimates will necessarily change from year to year. The Financial Analysis is made up of a finding of the association’s current Reserve Fund Status (measured in cash or as Percent Funded) and a recommendation for an appropriate Reserve contribution rate (Funding Plan)