CAI-NJ June 2018 (w)

PITFALLS... from page 27.

mon elements. Understand that saving money in the short term can set the community up for failure in the long run. Deferring reserve contribution increases to save in the present will put more of a burden on future owners and will only give the community less time to make up for past underfunding. Analyze

whether or not the maintenance of a particular common element is still practical. A community may think they are saving money by continuing to maintain certain common elements when in reality replacing certain items may be more cost-effective than con- tinued maintenance. n

broadens the spectrum of buyers who can afford homes in an association because having the insurance comes along with a more favorable loan term. So, what does this have to do with an association’s reserve budget? The FHA sets minimum standards to acquire this insurance if a prospective unit owner intends to live in a commu- nity with an association. The standards are set based upon minimum financial threshold percentages required, which in turn is dependent upon owner occu- pancy ratios. In other words, as the number of vacant units in a community increases, the minimum required finan- cial threshold to acquire FHA insurance increases. And what has a significant affect on community vacancy? Financial strength and physical appeal. If a community has a poor financial status, physical appeal cannot be maintained. Approval of FHA insurance becomes increasingly difficult, which burdens real estate listings and resale values. Although unsuspecting issues can arise and lead to the scenarios outlined above, there are practices associations can follow to prevent or ease the bur- den of financial pitfalls. Some include early and consistent financial planning. Do not delay financial budget plan- ning if your community is new with pristine components. As stated above, the deterioration of building and site components is inevitable. Update your reserve studies regularly and follow the guidelines set forth by your reserve specialist. Implement a comprehensive maintenance program. When regularly performed, maintenance can prolong the useful life of some significant com-

tech touch value LEVERAGING TECHNOLOGY TO STREAMLINE COMMUNICATION, OPERATIONS AND REPORTING. CULTIVATING RELATIONSHIPS TO ENSURE HIGHLY SATISFIED ASSOCIATION RESIDENTS AND STAKEHOLDERS. PRESERVING AND ENHANCING VALUE THROUGH BEST-IN-CLASS SERVICES.

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Financial services Management services Communication services Construction & maintenance management Transition management services Emergency management Consulting Community Association Management

To learn more, visit IntegraMgtCorp.com or call Edward San George, MPA, PCAM at 973.770.1500 .

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