–by Clara Rose
Why do you get an annual physical for yourselves and your loved ones? To see how your health is of course. How high is: your cholesterol, your blood sugar or your blood pressure and what are your body’s vital signs? This information tells your physician about your overall health and if there are any signs of potential future problems.
So, why not do the same for your property – how are the financial “signs” looking? A good Reserve Plan will provide you with vital information about the overall health of your resort or timeshare property? Has your property had one this year, last year… or ever?
“A Reserve Management Plan or Study is… much like going to the doctor for a physical, when you are feeling fine… it’s like a physical for your property!”
FARROW Commercial Construction, Specialty Services Division,
A physical for your property… what a great idea! A check up, if you will, on the financial stability of your investment in a common interest development. In fact, as a board member or manager you have a fiduciary responsibility to know about the financial stability of the property!
The Reserve Doctor
A Reserve Management Plan (RMP) also commonly called a Reserve Study (RS) is a physical and financial analysis of assets within a common interest or shared ownership development; such as a timeshare resort, fractional property, condo hotel or a condominium complex.
It is simply a tool used by associations and management companies to determine what will be needed financially to repair and maintain the property in the future.
The Reserve Management Plan ensures that a funding schedule is established for the maintenance, repair and replacement of major common area components. Reserve accounts are established and maintained to hold the funds for the long-term or deferred maintenance and replacement of any assets that the associations is responsible for.
Time and usage will always bring about the deterioration of common elements of any property. The older the property is, the more wear and tear that can be expected, so the establishment of an association reserve account is both necessary and prudent as the property ages.
Reasons for a House-call
Here are just a few of the reasons that a Reserve Plan should be done every three to five years on all shared ownership properties:
- The RMP provides management accountability in the form of a written, historical record and helps to document good stewardship of association assets and reserves.
- The RMP offers an invaluable management tool for long range planning and advanced scheduling of major repairs or replacement of components.
- The RMP establishes a schedule by which funding for maintenance, repair and replacement of common area components are achieved and provides assurance that funding to maintain the property will be available when needed.
- Owners are assured that their investment will be enhanced over time through an equitable and systematic approach to accumulating the replacement reserves.
Schedule a Physical
Benjamin Franklin once said, “an ounce of prevention is worth a pound of cure.” This defiantly applies to a resort or timeshare property. Planning ahead can help to avoid big issues, for which the cure can be very costly.
The Reserve “Physical” offers peace of mind about overall health of your property. Don’t procrastinate, now is the time to schedule your property for its 2012 physical with a Reserve Specialist.
Clara Rose is the Executive Director of Communications for FARROW Commercial Construction and the Executive Director of Operations for ADAF --– the first company to offer an ADA Friendly rating system for the hospitality industry. Clara is also The Resort Industry Examiner for Examiner.com, editor of The FARROW Report, editor of The FARROW Connection, an Expert Author for EzineArticles.com, a contributor for the Yahoo Contributors Network and a contributing editor for Hotel Business Review.
Phone: (727) 329-8463
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