Preparing for The Unexpected: Building Resilience in Your Reserve Fund
As a community association board member or property manager, you’re no stranger to the importance of keeping an eye on the reserve fund. This fund isn’t just a safety net for regular repairs and upgrades—it’s also your community’s lifeline when the unexpected comes knocking. But how can you make sure your reserve fund is up to the task of handling emergencies and unforeseen events?
Here are some practical strategies to help fortify your reserve fund against the unexpected:
Spread Your Investments
Just like with your personal finances, it’s smart to diversify your reserve fund investments. Spread your money across different types of assets, maturity dates, and financial institutions. This helps spread out the risk and ensures you have easy access to cash when you need it.
Stay Up to Date
Your community changes, and so should your reserve fund plan. Make it a habit to review and update your reserve study, ideally you should always keep it up to date with the reserve fund planning software Living Reserve Study™. This way, you can make sure your fund stays on track to meet your community’s needs, even when the unexpected throws a curveball.
Create an Emergency Backup
Sometimes, you need a safety net for your safety net. Consider setting aside a separate emergency reserve fund specifically for unexpected expenses, like natural disasters or legal issues. Aim to stash away enough to cover 3-6 months of your operating expenses.
Have a Plan B (and C)
If your reserve fund falls short in a pinch, it’s good to have backup options. Explore things like lines of credit or special assessments to bridge the gap. Having these alternatives in your back pocket can give you the flexibility you need to handle whatever comes your way.
Keep Everyone in the Loop
Communication is key. Keep homeowners in the loop about what’s going on with the reserve fund—its purpose, its status, and any potential changes. This builds trust and makes it easier to rally support for special measures if they’re ever needed.
By taking proactive steps to reinforce your reserve fund, you’ll be better equipped to handle whatever twists and turns come your community’s way. And that’s a surefire way to give everyone peace of mind, knowing that you’re ready for whatever life throws your way.
