The property management company is responsible for keeping any building under its care in good working order while also carefully budgeting the building’s reserves. Looking ahead, and sometimes well ahead, is absolutely crucial for keeping the building’s reserves healthy while also getting necessary maintenance and even improvements to the building done.
Generally, building maintenance falls into two categories: planned maintenance and unplanned maintenance. The property manager has to plan for both.
Planned maintenance is done at regular intervals and is meant to prevent the breakdown of building components. Usually, under the advice of the property management company, the HOA board will hire a firm every few years to survey the building and determine what the likely maintenance costs will be for the next term. Healthy reserves track this forecast closely, and attempt to stay at around 70% of these projected costs.
Generally speaking, spending a little more on preventative maintenance helps to save more money in the long term. Holding off on scheduled maintenance to save money in a particular year can actually end up costing the building more in the long term.
Unplanned maintenance is usually urgent and therefore tends to be more costly. That’s why every property management company has in its interest to move as many maintenance items in the “planned” category as possible. Obviously, you can’t control every factor, and some level of unplanned maintenance will always inevitably come up. That’s what the remaining 30% of the building’s reserves are there for.
Do you have a question about the management of a building’s reserves? We’re here to help! Contact us to discuss your building’s financial situation.