Often, people prefer to purchase homes in gated communities for the security they offer, and the opportunity to live with like-minded people in a social setting. Condominiums are fairly popular across the world. Now, how important is it to maintain and grow your community and how important is it to keep reserve funds to ensure that your condominium remains well maintained, has a long life, appreciates in value over years and is turned into a sought-after location? Even if you do not want to attract buyers at a later date, it is crucial that your condominiums are well maintained and there are reserves to fund such maintenance and development works and ensure timely implementation. Let us find out how and why are condominium reserves important.
There will be regular wear and tear of everything around you in a condominium:
- The roof could develop leaks.
- The heating and water pipes could develop cracks.
- There can be leakage and seepage into the walls, doors, windows, ceilings and floors.
- Your expensive paint and wallpaper can suffer damage.
- And ultimately, belongings within the house, such as furniture, appliances, entertainment units, clothes, books, etc. can be damaged.
- Last but not the least are the associated health hazards - skin irritations, colds, allergies, illnesses, etc from moist fungal growth or poor hygiene and maintenance.
It is scary to imagine living in such a scenario! Externally, the landscaping may lose relevance if not maintained well, lawns need to be mowed on time; roads need re-asphalting from time to time, and it is good to have a system for clearing rainwater and snow during seasons. Besides this, you may want to put in place, a regular housekeeping service for window cleaning, plumbing, electrical and chimney maintenance. This list could only go on...
The good news is most developers provide for almost all these requirements and even advertise them heavily while selling condominiums to you. However, have they provided or made arrangements for continuing the maintenance and upkeep over the years that you own the condominium?
Let us look at how these requirements can be provided for:
- The condominium owners/occupants association should budget for these costs and services and charge occupants on a monthly/periodical basis, while ensuring [as nearly as possible] services remain constant.
- Occupants must ensure to pay these dues on time for their own benefit.
- While this is done, check to see if a portion of the charges are allocated towards Condo Reserves.
- You should normally budget for at least 180 days of expenses.
- Ensure to take into account average increases in costs of raw materials, maintenance materials, gas and heating costs.
- There may be times when the periodical charges need to be upwardly adjusted for sudden increase in input costs, such as the hike in gasoline rates we saw last year.
- It would also be nice to provide for a downward adjustment when costs come down, or better still assure occupants that they need not worry about a increase soon.
- Maintain accurate, efficient and transparent records of funds received and spent on maintenance works completed.
Besides maintaining a Condo reserve fund, the importance of which is stated above, do pay attention to maximize returns on utilizing services optimally. Call for competitive bidding by your suppliers and service providers. Use only those services that are essential. Make arrangements to turn off that extra elevator during non-peak hours. Likewise, turn off common area lighting during daytime.
A condominium reserve fund definitely helps in maintenance and upgrade costs. As a property owner, you will be well aware of the benefits, which accrue from regular maintenance, and provisions for emergency situations - not only is your property maintained, its potential selling value will also increase. Putting aside a regular sum of money into a reserve fund, will prevent potential losses in situations such as a natural calamity, or help you in getting a good sale price, should you ever decide to put your condominium on the market.
Click here to visit HowToDoThings.com