Rent Real EstateThe Homeowner Association Death Spiral
There is a term for homeowner associations that don"t plan. It"s called: "The Death Spiral". This applies to associations that have neither a plan nor money to properly maintain the property.
These folks have a kind of myopia...an inability to see their assets deteriorate right before their eyes complicated further by the belief that someone else will pay for the
problem in the future.
In recent years, a tool has been developed that reverses the Death Spiral, or better yet, prevents it to begin with called the "Reserve Study". The reserve study identifies major repair and replacements like painting, roofing and fencing that happen between 3 and 30 year intervals.
For example, paint lasts about 6 years on average, while asphalt shingles last 25 years or more. The study provides a fair funding plan to make sure enough money is there when these components come due.
Reserve planning gets to the essence of the shared destiny of homeowner association living. Homeowners that choose common wall living assign exterior maintenance responsibilities of their home and other commonly held assets to the association.
Since owners buy and sell, come and go at different intervals, a special system is required to address maintenance of major expenses and to balance out the costs fairly. A long range reserve plan projects maintenance requirements and costs over a thirty year period and divides the costs up monthly so that each owner pays a fair share of the expenses. Moreover, the plan provides present and future Boards with a sensible roadmap to handle major maintenance.
If your community is in a Death Spiral... reverse the avoidable with a reserve plan today. Don"t die a slow death... reserve and keep your assets alive!
For more information on this subject, see www.Regenesis.net.