TIP OF THE MONTH - February 2014


Source: Property Management-7th Edition            
Robert C. Kyle

In any budget forecast, the reserve fund is placed in the expense category, either under maintenance or repairs.  In large buildings, this figure is often estimated at 10-15 percent of the total cost of all supplies, maintenaance, and repairs, but the actual amount of necessary reserves fluctuates greatly accordingly to a property’s age and size, among other features.  Experience alone will teach the manager to calculate reserve funds realistically.  Property management professionals have a saying that “unexpected expenditures may be expected”.  Roof repairs, boiler replacement, outside masonry repair, and expenses due to flood or other catastrophe not covered by insurance are only a few of the unforeseen contingencies that can arise.  Many mortgage loans under federal government programs require establishing a reserve fund for replacement expenditures.

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This web page was updated on 02/02/2014.