Common Reserve Study Mistakes HOA Boards Make

Introduction: Why Reserve Studies Matter

For Rhode Island condo associations, HOAs and other common interest communities, a reserve study is a financial report and roadmap to long-term community stability. Yet even the most well intentioned boards often make costly mistakes when managing, updating, or interpreting their Reserve Studies in Rhode Island.

At Hennessy Reserve Partners, we’ve seen firsthand how small oversights can lead to major assessments, deferred maintenance, and community frustration. Here’s a look at the most common reserve study mistakes HOA boards make and how to avoid them.

1. Confusing Operating Budgets with Reserve Budgets

One of the most common errors boards make is failing to understand the Difference Between Reserve and Operating Budgets.

Your operating budget covers everyday expenses including landscaping, cleaning, snow removal, and utilities. Your reserve budget, on the other hand, funds long-term capital projects like roof replacements, pool resurfacing, and asphalt repairs.

Example: A Warwick condo association funded major repairs through their operating budget. When a large roof project hit, their funds were depleted, forcing a hefty special assessment. After creating a proper Rhode Island Condo Association Reserve Study, the board now confidently separates their monthly contributions and has avoided any special assessments since.

2. Not Updating the Study Regularly

A reserve study isn’t a one-and-done document. Materials age, costs rise, and priorities shift, which is why it’s critical to Update Your Reserve Study in Rhode Island every 3-5 years.

Example: A Narragansett seaside community relied on a decade-old study. When salt air corrosion accelerated wear on balconies, their estimates were off by a lot. An updated study realigned their funding plan and phased repairs over five years. This prevented emergency loans and restored homeowner confidence.

3. Skipping the Physical or Financial Analysis

A comprehensive reserve study includes both a physical vs. financial analysis in reserve studies and skipping either can lead to inaccurate results.

• Physical Analysis: Inspects and estimates the remaining useful life of major assets.

• Financial Analysis: Determines the funding levels and contribution rates needed to keep reserves healthy.

  
  

Example: An HOA in South County relied on a generic financial spreadsheet without any physical inspections. After a full on-site evaluation, several components, like retaining walls and stairwells, were nearing the end of their life cycle. Their new funding model saved the association from unexpected repair costs within the next two years.

4. Underestimating Component Costs

Boards often overlook the importance of precise Reserve Studies Components, everything from roofing and paving to mechanical systems and pool decking. Omitting or undervaluing even one component can leave the association severely underfunded.

Example: A Providence mid-rise condominium didn’t include its elevator modernization in its reserve plan. Once the city required code upgrades, the cost came as a shock. By working with analysts to create a detailed component inventory, the board avoided future budget gaps and improved long-term predictability.

5. Failing to Communicate the Value of the Study

Some boards complete the study but don’t share its importance with homeowners. This lack of communication can create tension when contribution rates increase.

Educating residents with a Reserve Studies FAQ or summary presentation helps build transparency and trust. When homeowners understand why reserves are essential, they’re far more likely to support the funding plan.

6. Not Using a Local Expert

Every region has unique environmental and market conditions. Choosing a team familiar with Reserve Studies in Rhode Island ensures accurate cost projections for local materials, contractor rates, and weather-related wear.

At Hennessy Reserve Partners, we specialize in Rhode Island Condo Association Reserve Studies, with expertise in coastal exposure, regional construction costs, and compliance with state-level guidelines.

Conclusion: Avoid Common Reserve Study Mistakes By Partnering With Experts Who Understand Your Community

If you avoid these common reserve study mistakes, you can save your association from financial strain and homeowner conflict. Whether you’re establishing your first study, need to Update Your Reserve Study in Rhode Island, or want clarity on the Difference Between Reserve and Operating Budgets, our team provides clear, actionable insights.

Contact Hennessy Reserve Partners to ensure your community’s financial foundation is built for the long term because proactive planning today prevents costly surprises tomorrow.