Capital Reserve Studies
Target Building Inspections conducts Capital Reserve Studies in accordance with The Community Associations Institute (CAI).
The purpose of the Capital Reserve Study is to estimate the amount of money which must be set aside to replace those common element items which meet the IRS definition of a capital expenditure and which will wear out before the entire facility requires replacement.
Mortgage lenders recognize the condition of inadequate reserves. Reserves are important in preserving the qualities of a particular complex or building and therefore can affect property values. Consequently, capital reserves are directly related to the security and risk of a lender's investment.
The Capital Reserve Study develops a recommended basic annual contribution based upon current replacement costs. The effects of inflation and interest are shown via cash flow projections using several inflation and interest rates. Accurate reserve funding requires regular updates. The Community Associations Institute (CAI) recommends yearly reviews.
Not all states require a Capital Reserve Study.
The purpose of the Capital Reserve Study is to estimate the amount of money which must be set aside to replace those common element items which meet the IRS definition of a capital expenditure and which will wear out before the entire facility requires replacement.
Mortgage lenders recognize the condition of inadequate reserves. Reserves are important in preserving the qualities of a particular complex or building and therefore can affect property values. Consequently, capital reserves are directly related to the security and risk of a lender's investment.
The Capital Reserve Study develops a recommended basic annual contribution based upon current replacement costs. The effects of inflation and interest are shown via cash flow projections using several inflation and interest rates. Accurate reserve funding requires regular updates. The Community Associations Institute (CAI) recommends yearly reviews.
Not all states require a Capital Reserve Study.
