Your reserve fund is what helps your community association anticipate its future – and budget for it, too. The reserve fund provides your association with the power to maintain the quality of your community by helping you plan for work that is both necessary and expensive (like a future roofing or paving project, for instance). In fact it is so important that in North Carolina, sellers must present prospective buyers with a disclosure stating the community’s current reserve balance and the amount in the budget allocated to reserves.
 
Establishing this fund can get a little complex. Thankfully, you don’t have to be a fortune teller to read the future of your association...you simply need a good reserve study firm to help. Here’s how you can find the right firm for your community.
 
1. Do some homework.
First of all, any prospective firm you work with will want to know all about your community association. Collect information on your association and develop a detailed profile of it. You will need information such as location, number of units, description of buildings, list of amenities, association fees paid, etc.
 
2. Gather a list of possible firms.
Searching for candidates is easy. Good property management companies maintain a list of qualified firms. You can also check with your local chapter of the Community Associations Institute or go to caionline.org.
 
3. Ask thorough questions.
Decide what matters most to your association in evaluating potential firms. You will get a clearer picture of the firm and what it can do for your association by asking questions such as number of years in business, number of studies performed per year, company background, the firm’s experience with communities similar to yours, funding methods, pricing structure, time it takes to complete the work, needed involvement from the association and types of guarantees. Identifying the most important factors when it comes to hiring a firm for your association will help you evaluate the candidates. 
 
“If boards want to drill down on specific information to ask the reserve study firms, then their FirstService Residential partners can help with that,” said McCall Baker, director of community management for FirstService Residential in North Carolina. “It is another way we can add value to the communities we serve.”
 
4. Ask for information.
Reach out to your candidate firms with a request for standard informational material, such as examples of previous reports. After reviewing the material the firm sends you, ask the questions you developed earlier, carefully recording the answers they give you. As you interview more firms, you may find that your questions evolve as well; it’s okay to circle back to earlier interviewees if you want to get any additional information as you develop new questions. Don’t forget to request three references. 
 
5. Compare.
Your research is done; now it’s time to compare the firms you interviewed. Here’s a simple suggestion for making a comparison matrix: create a spreadsheet that lists your hiring criteria in the left-hand column; list your candidate firms across the column headers. After that, use your research to fill in the boxes with which firms fulfill which trait. At this time, ask your accountant to review the sample reports your candidates provided to make sure they meet your federal filing needs. When your matrix is complete, eliminate those that don’t meet your most basic requirements. The rest are up for evaluation. 
 
6. Check the references  
Contacting the remaining firms’ references should involve brief conversations of about 10 questions. Ask whether the association was happy with the firm’s work, how similar the association is to yours, when the study was done, how cost estimates compared to actuals, if the evaluation was delivered on time, if there was something they wished the firm had done differently, whether they considered hiring other firms, what factors they used in choosing this firm, and whether or not they’d hire the firm again. Be efficient, friendly and respectful of their time. 
 
7. Make the call.
It’s down to the wire. You’ve identified candidates. You’ve interviewed them and eliminated the non-contenders. You’ve evaluated them via a candidate matrix, and you’ve spoken to their references. Now you have all the information and tools to make an informed decision.

Partnering with a quality reserve study firm can have a huge impact on the future of your association and its finances. Follow the steps outlined above and you’re going to find yourself working with the right firm, one that meets your expectations. For more help in finding a reserve study firm, contact FirstService Residential, North Carolina’s leading property management company.
 
Friday September 30, 2016