Do Small Associations Still Need a Reserve Study? Here’s Why the Answer Is Yes

Many small HOAs and condo associations wonder if the process of Reserve Studies in Rhode Island is truly necessary. After all, with fewer units and a smaller budget, it can feel like a luxury rather than a necessity. But the truth is, even the smallest associations benefit tremendously from a professionally prepared reserve study.

At Hennessy Reserve Partners, we’ve seen firsthand how small boards that take the time to plan properly end up saving money, avoiding special assessments, and protecting property values in the long run.

Why Reserve Studies Matter for Small Associations

A reserve study is a roadmap for maintaining the community’s shared assets. Whether your association manages just 10 units or 100, the Reserve Studies Components remain the same:

• Physical Analysis - a detailed review of the property’s assets, such as roofing, siding, parking lots, HVAC, pools, and clubhouses.

• Financial Analysis - a clear look at your association’s funding levels, contributions, and projected costs over time.

This physical vs. financial analysis in reserve studies ensures that no major expense catches your community by surprise.

Reserve Study for a Small Condo Community in Newport, RI

A 12 unit condo association in Newport thought a reserve study wasn’t worth the investment. When their roof needed replacement, however, the lack of planning meant each owner had to pay a special assessment. 

By identifying long-term expenses and setting up a realistic funding plan, they could have budgeted responsibly. 

The Difference Between Reserve and Operating Budgets

A common misconception for smaller associations is that their operating budget alone will cover all expenses. But the difference between reserve and operating budgets is critical:

• Operating Budget: Covers day-to-day expenses like landscaping, utilities, and insurance.

• Reserve Budget: Funds long-term, large-scale repairs and replacements.

Without a reserve budget, communities end up relying on emergency assessments.

Rhode Island Condo Association Reserve Studies

Even small boards are subject to the same responsibilities as larger ones. In fact, Rhode Island condo association reserve studies are often even more important for small communities because fewer owners means a heavier burden if unexpected costs arise.

For example, replacing a roof in a 10-unit community may cost the same as in a 40-unit complex but the financial impact per homeowner is four times greater.

Do Small Associations Need a Reserve Study? A 20-Unit HOA in South County

A South County HOA with only 20 homes wanted to keep dues low to stay competitive in the market. They avoided funding reserves for years until their septic system needed full replacement. The cost per homeowner was astounding.

After this financial shock, the board looked to complete a reserve study. Had they known the answer to "Do Small Associations Need a Reserve Study?" they would have done this earlier. Today, they contribute steadily to their reserves, and when their pool needs major resurfacing in three years, the funds will be ready.

Why You Need to Update Your Reserve Study in Rhode Island

Reserve studies aren’t one-and-done projects. Building components age, costs rise, and budgets shift. Best practice is to update your reserve study in Rhode Island every year. Full reserves studies should be performed every 3-5 years.

Small associations who think “nothing changes” can be caught off guard by inflation, contractor costs, or unexpected deterioration. A fresh update keeps your plan realistic and your community prepared.

Reserve Studies FAQ

Q: Are reserve studies really necessary for small associations?

A: Yes. With fewer owners, financial risks are actually greater without planning.

Q: What does a reserve study include?

A: Both physical inspections of assets and financial forecasting, commonly called the Reserve Studies Components.

Q: How often should we update our study?

A: Every 1-2 years, or sooner if a major project is completed. Full reserve studies should be performed every 3-5 years. 

Q: What’s the cost compared to special assessments?

A: Reserve studies are a fraction of the cost of unexpected assessments. They pay for themselves many times over.

Conclusion

No association is “too small” for financial planning. In fact, the smaller your community, the bigger the financial shock when an unexpected repair happens. Reserve studies in Rhode Island help boards of all sizes protect property values, avoid stressful assessments, and keep owners confident in their investment.

At Hennessy Reserve Partners, we specialize in guiding small and large communities alike through the process of long-term planning. Whether you need a first-time report or need to update your reserve study in Rhode Island, we’re here to help.

Are you ready to protect your small association from financial surprises? Contact Hennessy Reserve Partners today to schedule your reserve study in Rhode Island.