Waiving reserves in a condominium association might seem like a tempting way to reduce monthly fees, but it can have long-term, destructive effects on the building's financial health. In essence, residents who waive reserves are sucking the life out of the building.

Reserves are critical funds that help cover major repairs and replacements—things like roof replacements, plumbing, and HVAC systems. Without a healthy reserve fund, the association is left scrambling when these large expenses arise. This can lead to special assessments, higher fees down the line, and the gradual deterioration of the property.

Many residents have the mindset of, "Why should we pay for the next owner's roof?" But in reality, they are already paying for the roof currently being depreciated. Over time, the building’s condition can suffer, and the cost to maintain it will only rise. Not having sufficient reserves means that residents are putting the immediate gratification of lower fees ahead of the long-term well-being of the community. In the end, this short-sighted approach could significantly decrease the value of the property and lead to costly financial consequences for everyone involved.
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Maintaining reserves ensures that when it's time to replace the roof—or any major system in the building—the funds are already available. It’s not about paying for someone else’s future roof, it’s about protecting your investment and ensuring that the building remains in good condition for current and future residents alike.
Protecting the building's future starts with maintaining reserves. It's an investment in the building’s longevity—and the residents’ financial stability.

When it comes to safeguarding your property and ensuring its long-term financial health, having the right professionals on your side is crucial. That’s where Felten Property Assessment Team (FPAT) comes in. Whether you need an accurate insurance appraisal, a detailed reserve study, or a comprehensive wind mitigation report, Felten Property Assessment Team stands out as the best choice for all of these services. Here’s why:

1. Expertise You Can Trust
FPAT is made up of experienced professionals who specialize in property assessments, reserve studies, and wind mitigation inspections. With years of experience in the industry, they understand the intricacies of property valuation, insurance requirements, and the unique needs of community associations and property owners. Their team has the expertise to deliver precise, reliable, and actionable reports that you can count on.

2. Accurate and Comprehensive Insurance Appraisals
Getting the correct insurance appraisal for your property is essential to avoid being underinsured or paying for unnecessary coverage. Felten Property Assessment Team utilizes the latest tools, technology, and industry standards to provide accurate and detailed appraisals. Their approach ensures that your property is insured to the proper value, protecting you from potential financial loss in the event of a disaster. Whether it's for a condominium building, commercial property, or residential home, Felten’s insurance appraisals give you peace of mind knowing you’re fully covered.

3. Thorough and Insightful Reserve Studies
A well-funded reserve is the backbone of any community association, and FPAT helps ensure that your association is financially prepared for future repairs and replacements. Their reserve studies offer a detailed analysis of your property’s current condition, projected future costs, and recommended funding strategies. With their comprehensive reports, you’ll have a clear roadmap for managing reserve funds and avoiding costly special assessments or unexpected financial burdens in the future.

4. Wind Mitigation Reports That Save You Money
Living in a hurricane-prone area means you need to take extra steps to protect your property—and your wallet. Felten Property Assessment Team’s wind mitigation reports help you qualify for insurance discounts by identifying features of your property that reduce the risk of wind damage, such as roof reinforcements, roof shape and impact-resistant windows and/or shutters. These reports can lead to significant savings on your homeowner’s insurance premiums, making it a smart investment that pays for itself.

5. Personalized Service with a Focus on Customer Satisfaction
What sets FPAT apart from others is their commitment to providing personalized service. They take the time to understand your unique needs, answer your questions, and guide you through the entire process. Whether you’re an individual property owner or part of a larger community association, you can expect timely, responsive communication and reports that are easy to understand and apply.

6. Compliance and Peace of Mind
Felten Property Assessment Team is committed to ensuring that all their reports comply with local laws, industry standards, and insurance requirements. Whether it’s meeting specific guidelines for insurance appraisals or ensuring your reserve study aligns with statutory requirements, you can trust that Felten’s work is always compliant. This attention to detail helps prevent future issues, offering you long-term peace of mind.

Conclusion
When it comes to protecting your property and managing its financial health, Felten Property Assessment Team is the clear choice for insurance appraisals, reserve studies, and wind mitigation reports. With their expert knowledge, accurate reports, and customer-focused approach, Felten ensures you get the best value and protection for your property—now and in the future.
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Don’t leave these important tasks to just anyone. Trust the best in the business--Felten Property Assessment Team—to help you safeguard your property and secure its financial future.

A reserve study is a crucial tool for any community association, providing a clear financial roadmap for future repairs and replacements of shared property elements like roofs, plumbing, and HVAC systems. However, it’s not a one-and-done process. Regularly updating your reserve study is just as important as creating the initial one.

As time passes, the condition of your property’s assets changes, costs fluctuate, and priorities may shift. Without an updated reserve study, your association could be underfunded or overfunded—leading to financial instability or unnecessarily high fees for residents. An updated study ensures that the reserve funds are accurately aligned with current needs, preventing surprise assessments or inadequate funding when major repairs are needed.

Additionally, regular updates allow for more accurate projections of future expenses, ensuring the community is prepared for both expected and unforeseen costs. Whether it’s adjusting for inflation, incorporating new repairs, or assessing the life expectancy of key systems, an updated reserve study ensures the financial health of the community remains strong.
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In short, updating your reserve study regularly isn’t just good practice—it’s essential for maintaining the long-term stability and value of your property.

Hurricanes bring devastation to communities, damaging homes, businesses, and infrastructure in their wake. The road to recovery often involves rebuilding, but many property owners don’t realize that after a hurricane, the cost of construction can increase dramatically, making the process more expensive than expected. One critical step that can help property owners avoid financial pitfalls in this scenario is ensuring they are insured to value by accurately assessing their building's replacement cost using a reconstruction cost database.

In this blog, we’ll explore why construction costs increase after a hurricane, the financial impact of these price hikes, and how using a reconstruction cost database to ensure you're properly insured can help you avoid costly underinsurance.

Why Construction Costs Increase After a Hurricane
When a hurricane strikes, it typically leaves widespread damage in its wake, leading to increased demand for building materials, skilled labor, and services. This surge in demand drives up construction costs for several key reasons:

1. Increased Demand for Materials
In the wake of a storm, there’s an immediate need to replace or repair damaged structures. Materials like lumber, roofing, drywall, windows, and steel become scarce as many properties require similar supplies. With local suppliers running out of stock and transportation networks impacted by the storm, the prices for these materials soar.

2. Labor Shortages and Increased Wages
Skilled workers like contractors, electricians, and plumbers are in high demand after a disaster. As more workers are hired to tackle the sheer volume of reconstruction needed, wages increase. In addition, projects often take longer to complete due to a shortage of available labor, further driving up costs.

3. Supply Chain Disruptions
Hurricanes can disrupt critical supply chains, especially for materials that are imported or rely on specific delivery routes. Damaged ports, blocked roads, and flooded railways can all delay shipments, creating a shortage of construction materials. These delays lead to price increases as companies struggle to get the materials they need.

4. Inflation of Insurance and Risk Costs
Insurance premiums rise after a hurricane due to the increased risk. Insurance providers must adjust their pricing to account for the heightened likelihood of future claims, and these increased premiums are often passed on to construction projects. This, in turn, makes construction costs more expensive, as contractors factor in higher insurance rates.

5. Changes in Building Codes and Regulations
After a major hurricane, local governments often implement stricter building codes to increase resilience against future storms. New regulations might require the use of more expensive materials or enhanced structural features. While these changes are important for reducing future damage, they add to the overall cost of rebuilding.

The Risk of Underinsurance and the Importance of Being Insured to Value
Now that we understand why construction costs rise after a hurricane, it’s important to consider how this affects your insurance coverage. One of the most significant challenges property owners face when rebuilding is ensuring that their insurance policy covers the true replacement cost of their property.

Many property owners make the mistake of relying on market value or outdated appraisals when choosing their coverage amount. This can lead to being underinsured, meaning the insurance policy doesn’t cover the full cost of replacing the damaged property, leaving the owner with a financial gap.

Here’s where insuring to value becomes critical. To avoid underinsurance and ensure that your policy covers the real cost of rebuilding, you need to know the accurate replacement cost of your property. This is where a reconstruction cost database can be invaluable.

How a Reconstruction Cost Database Helps You Stay Insured to Value

A reconstruction cost database is an industry tool used to determine the actual cost of rebuilding a property based on current construction costs. These databases take into account factors like local labor rates, material costs, and even the specifics of your property’s design and features.

Here’s why using a reconstruction cost database is essential for getting the right coverage:

1. Accurate Assessment of Replacement Costs
A reconstruction cost database provides a more accurate estimate of what it would cost to rebuild your property (remove & replace), including labor, materials, and other necessary expenses. Unlike market value, which reflects the value of the land and property in the current real estate market, the reconstruction cost focuses on the cost to actually replace the building itself—ensuring your insurance policy covers these expenses, even as material and labor prices rise.

2. Account for Regional Variations
Construction costs vary by region, and a reconstruction cost database factors in the specific area in which your property is located. For example, construction costs in coastal areas prone to hurricanes may differ from those in more inland areas. By using a database tailored to your location, you ensure that your property’s replacement value is accurately assessed, even in the face of fluctuating regional prices.

3. Adjust for Inflation and Market Changes
The cost of construction materials and labor fluctuates over time due to market conditions, inflation, and supply chain changes. A reconstruction cost database is regularly updated to reflect these changes, ensuring that your coverage stays in line with current market conditions. This proactive approach helps you avoid being underinsured when construction prices inevitably rise after a hurricane.

4. Avoid Co-Insurance Penalties
Co-insurance clauses in property insurance policies often require buildings to be insured for a certain percentage (usually 80% to 100%) of their replacement cost. If your building is underinsured—meaning it’s not covered for the correct amount—you may face a co-insurance penalty in the event of a claim. A reconstruction cost database ensures that your building is insured to the correct value, avoiding the risk of penalties and ensuring you receive the full payout if disaster strikes.

Steps to Protect Yourself from Rising Construction Costs After a Hurricane

To safeguard yourself from the financial impact of rising construction costs after a hurricane, consider these key steps:

1. Obtain a Professional Appraisal
While a reconstruction cost database provides an excellent starting point, it’s wise to consult with an insurance appraiser or broker who can assess the unique aspects of your building and determine its precise replacement cost.

2. Review Your Insurance Coverage Regularly
Ensure that your coverage is always aligned with the current replacement cost of your property. After a hurricane, this is especially important, as construction costs may have risen since your last review. Regularly reviewing and updating your policy can help you avoid underinsurance.

3. Consider Inflation Protection
Some insurance policies offer inflation protection, which automatically adjusts your coverage to account for increases in construction costs over time. This can be an especially useful option in hurricane-prone areas where construction prices are volatile.

4. Work with an Experienced Insurance Agent
Your insurance agent can help you navigate the complexities of being insured to value, ensuring that you have the right coverage to protect your property fully. They can also advise you on using a reconstruction cost database and other tools to ensure your property is accurately valued.
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Conclusion
Rebuilding after a hurricane can be a costly and overwhelming process, but being properly insured to value can help you avoid significant financial setbacks. By using a reconstruction cost database to assess the true replacement cost of your property, you ensure that your insurance policy covers the full cost of rebuilding, even when construction prices rise after a storm. Don’t wait until it’s too late—take the steps today to ensure you’re adequately covered and ready to recover if disaster strikes.

In recent months, Florida has seen an influx of new reserve study companies emerging to meet the growing demand following the implementation of stricter condominium and homeowners association laws. As part of the 2022 legislation, Florida law now requires condo associations to conduct reserve studies every 10 years and provide updated reserve funding plans for major building repairs and replacements. While this has created a more thorough approach to managing property maintenance and avoiding sudden, costly assessments for residents, it’s also led to the rapid expansion of reserve study businesses—some with little to no experience in the field.

These new companies, many of which have little background in reserve studies or the technical aspects of property management, are rushing to take advantage of the legislative changes. Unfortunately, this has raised concerns among property managers, association boards, and homeowners about the quality and reliability of the reports being produced. While some firms may offer low fees or quick turnaround times, they may lack the technical expertise to accurately assess long-term capital needs or properly evaluate building components.

Reserve studies are critical documents for ensuring that communities have enough funds to cover expensive repairs like roof replacements, parking lot resurfacing, or elevator upgrades. A poorly conducted study can lead to underestimated costs, resulting in shortfalls that could burden residents with unexpected special assessments.

As the market for reserve studies continues to grow, it’s important for Florida’s condo and HOA boards to do their due diligence when selecting a provider. Asking for certifications, checking industry experience, and looking for a firm with a strong track record in the field can help ensure that communities are adequately prepared for future maintenance and avoid costly mistakes down the road.

In short, while Florida’s new laws are creating a much-needed focus on property upkeep, the boom in reserve study companies is a double-edged sword. Associations must be cautious about choosing a provider with the necessary experience and expertise to deliver accurate, comprehensive reserve studies that will truly benefit their community in the long run.
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Another concern for associations turning to these new, inexperienced companies is the potential for instability in the marketplace. Many of these emerging businesses are small startups that may not have the longevity or financial backing to weather market fluctuations. When an association decides to update their reserve study a few years down the road—something that’s crucial for maintaining accurate assessments and funding plans—there’s a real risk that the company that initially provided the study may no longer be in business. This could leave associations scrambling for a new provider at the last minute, potentially causing gaps in continuity or forcing them to redo the study from scratch. With so much at stake in terms of accurate financial planning and long-term maintenance, relying on a company with an uncertain future could end up causing more problems than it solves.

​When it comes to protecting your condominium building, proper insurance is crucial. But how can you be sure that your building is adequately covered? The answer often lies in having a professional insurance appraisal completed. While it might seem like an unnecessary expense, a proper appraisal can save you from significant financial penalties, particularly when it comes to co-insurance.
In this blog post, we’ll dive into the concept of co-insurance, why it’s vital for condominium owners to have an insurance appraisal, and how doing so can help you avoid costly penalties down the line.
What is Co-Insurance?
Co-insurance is a clause typically included in property insurance policies. It requires property owners to insure their buildings to a certain percentage of their actual replacement value—usually around 80%, 90%, or even 100%. If the building isn’t insured for this specified amount and a claim is made, the insurance payout may be reduced to reflect the underinsurance.
In simpler terms, if your building is underinsured—meaning the coverage doesn’t meet the required percentage of its replacement value—you will be responsible for a portion of the repair or rebuilding costs in the event of damage. The result? A substantial out-of-pocket expense, even if you have insurance coverage.
Why Do Condominium Buildings Need Appraisals?
Condominium buildings are unique in that they are shared spaces, often with many individual owners involved. This makes ensuring the entire building (and sometimes the common areas) is properly valued and covered more complex. An accurate insurance appraisal ensures that the property is insured to its proper value, reducing the likelihood of co-insurance penalties.
Here are a few key reasons why appraisals are critical for condo buildings:
1. Accurate Replacement Value Calculation
Condominiums may have unique construction features, materials, and layouts that aren’t always standard. The market value of a condo might not always align with the actual replacement cost, which is what the insurance policy should cover. A professional insurance appraisal determines the accurate replacement cost, ensuring the building is insured to the correct value.
2. Preventing Underinsurance
If your condo building is underinsured—meaning the insurance coverage is less than the replacement cost—you may be subject to a co-insurance penalty. This means that if a disaster strikes and you file a claim, the insurance company may not cover the full cost of repairs. You could be left with a large financial gap.
By getting an appraisal, you ensure that the building is insured for the right amount, so if something happens, your policy will cover most or all of the damages, without any penalties.
3. Changing Market Conditions
Building costs fluctuate over time due to factors like inflation, changes in labor costs, and the price of building materials. What was adequate coverage a few years ago may no longer be enough today. Regular appraisals (typically every 2-3 years) can help adjust coverage amounts in line with the current market conditions, so you don’t fall victim to underinsurance.
4. Providing Clarity for Shared Ownership
In condominiums, multiple owners share the responsibility for the building’s insurance policy. Without a clear understanding of the replacement cost, there can be confusion about the proper coverage limits. An appraisal ensures that the policy is structured to cover the building appropriately, giving owners and the association a clear picture of what is needed.
How to Avoid Co-Insurance Penalties
To avoid the risk of co-insurance penalties, you need to ensure that your condominium building’s insurance coverage is up to date and reflects its accurate replacement cost. Here’s how you can do that:

1. Schedule Regular Appraisals: Every few years, have a professional valuate the current replacement cost of your condo building.
2. Review the Insurance Policy: Work closely with your insurance broker to ensure that the building is insured for the correct amount, based on the appraisal.
3. Understand the Co-Insurance Clause: Make sure that you are aware of the specific co-insurance requirement outlined in your policy. Typically, policies require coverage to be set at 80% or higher of the building's replacement value.
4. Make Adjustments After Major Renovations or Changes: If there are major renovations or updates to the property, it’s essential to have the insurance appraisal updated to reflect these changes.
5. Consult Your Association: In most cases, the HOA will be responsible for insuring the common areas of the building. Make sure the HOA has an up-to-date appraisal to avoid issues with shared coverage.

Conclusion
An insurance appraisal is not just an additional expense—it’s an essential step in ensuring your condominium building is adequately covered against the unexpected. By properly assessing the replacement cost and avoiding underinsurance, you can protect your building, your finances, and the peace of mind of all condo owners involved. Taking the time to schedule an appraisal and understand your insurance policy is an investment that can save you from costly co-insurance penalties and help you be prepared for the worst.
Stay proactive, stay protected, and avoid the financial pitfalls that can come with underinsurance.

​When it comes to managing the long-term financial health of a community association—whether it's a homeowners association (HOA), condominium association, or co-op—reserve studies play a crucial role in ensuring that the property can maintain its value, meet future maintenance needs, and avoid sudden financial burdens on owners. One of the key metrics that is often discussed in reserve studies is the “percent funded.” But what exactly does this mean, and why is it so important? Let’s break it down.
What is a Reserve Study?
Before diving into percent funded, let’s quickly review what a reserve study is. A reserve study is an in-depth analysis that helps communities plan for significant repair and replacement projects that will be needed over time. This includes things like roof replacements, repaving roads, updating elevators, or any other major capital improvements. The goal of a reserve study is to estimate how much money should be set aside today to ensure that these future expenses are covered, reducing the likelihood of special assessments (unexpected fees charged to residents) or costly loans.
What Does Percent Funded Mean?
Percent funded refers to how well the reserve fund is equipped to cover anticipated future expenses, as indicated by the reserve study. It’s essentially a snapshot of the financial health of the community’s reserve account, showing how close the current reserve balance is to the projected amount needed to cover future repairs and replacements.
Here’s the formula for percent funded:
Percent Funded = (Current Reserve Balance / Recommended Reserve Balance) x 100

• Current Reserve Balance: The amount of money currently in the reserve fund.
• Recommended Reserve Balance: The amount of money that, according to the reserve study, should be in the fund to cover the expected costs of future repairs and replacements.

For example, if a community’s reserve study recommends a reserve balance of $500,000 to cover future needs, but the community currently has $400,000 in its reserve fund, the percent funded would be:
($400,000 / $500,000) x 100 = 80% funded.
Why is Percent Funded Important?

1. Indicates Financial Health: Percent funded gives an at-a-glance view of how well the association is preparing for future repairs. A higher percentage (typically 70% or above) suggests that the association is reasonably prepared for upcoming expenses. A lower percentage could signal potential challenges, possibly requiring special assessments or borrowing money to make up the shortfall.
2. Helps Avoid Special Assessments: If a reserve fund is underfunded, the association may need to rely on special assessments—one-time fees charged to homeowners to cover immediate costs. Special assessments can come as an unpleasant surprise for homeowners, creating financial strain. Adequate funding of reserve accounts reduces the likelihood of having to impose these extra fees.
3. Supports Property Value: Buyers often examine the financial health of an HOA or condo association before making a purchase. A well-funded reserve account suggests the association is responsible and proactive, ensuring there are no looming costs that could affect the property’s value. Conversely, an underfunded reserve could raise concerns about potential financial instability.
4. Long-Term Sustainability: A community with adequate reserve funding is better positioned to maintain its infrastructure and handle repairs and replacements on schedule. This ensures that necessary projects are completed without jeopardizing the community’s financial health. Percent funded serves as an essential indicator of how well the community is planning for its long-term future.

Adequate Funding vs. Full Funding
While reserve studies may recommend full funding—where the reserve account is fully aligned with projected future expenses—it’s not always necessary to aim for 100% funding. In many cases, striving for adequate funding is a more realistic and practical goal.
Adequate funding typically refers to maintaining a reserve balance that ensures the community can reasonably meet future expenses without overburdening homeowners. This might mean achieving a reserve fund that covers 70% to 80% of anticipated costs, which is often sufficient to avoid drastic measures like special assessments. It also allows communities to adjust over time as their needs evolve.
What is an Ideal Percent Funded?
The "ideal" percent funded can vary from one community to another based on factors like the property’s age, condition, and the specific types of assets being maintained. However, a reserve funding target in the range of 70% to 80% is often considered adequate for most communities. Here’s how different funding levels typically stack up:

• 70-80% Funded: This is typically considered adequate funding. It shows that the community is actively preparing for future expenses without being overly conservative. While it may not cover every possible scenario, this level of funding usually provides enough cushion to manage anticipated repairs and replacements.
• 80% or Above Funded: This level of funding is still strong, providing extra security without necessarily being overfunded. A reserve fund in this range suggests that the community has planned well for future costs but isn’t tying up excessive resources that could be used elsewhere.
• Below 70% Funded: Communities below 70% funded should consider taking steps to improve their reserve balance. While it's still possible to manage with this level of funding, the association may face difficulties if major repairs are needed sooner than expected. In this case, it might be worth considering increased contributions or a review of the reserve study.

How Can Percent Funded Be Improved?
If your community is below the ideal (or adequate) percent funded, there are several strategies to help boost it:

1. Increase Reserve Contributions Gradually: One of the most straightforward ways to improve percent funded is by increasing the annual reserve contributions from homeowners. A slight annual increase, rather than a large jump, can make a meaningful difference over time, improving the reserve balance without causing financial strain.
2. Adjust the Reserve Study as Needed: It’s important to review the reserve study periodically, typically every 3-5 years, to ensure it reflects realistic estimates of future repair and replacement needs. An updated reserve study can help the community better align its funding targets with actual needs.
3. Prudent Management of Funds: Carefully managing reserve funds through smart investment strategies can also help the reserve balance grow. It’s essential to work with financial professionals to ensure that the reserve fund is growing at a reasonable rate.
4. Reassess Large-Scale Projects: Sometimes, large maintenance or replacement projects can be deferred or staggered, allowing the community to build its reserves gradually over time. With input from the reserve study and engineering experts, the community can prioritize repairs to balance the need for action with the available funding.
5. Special Assessments When Necessary: In rare cases, a special assessment may be required to catch up on a significantly underfunded reserve. This should be considered strategically and only if necessary to avoid more severe financial difficulties down the road.

Conclusion
Percent funded is an essential metric for understanding the financial health of a community’s reserve fund, but it’s important to recognize that adequate funding—typically in the range of 70% to 80%—is often sufficient to meet future needs. By maintaining an adequately funded reserve, communities can avoid financial crises, reduce the likelihood of special assessments, and continue to manage their infrastructure efficiently.
Instead of striving for full funding, which may not always be necessary or practical, focus on ensuring that your reserve fund is adequately prepared to cover future repairs and replacements. This balanced approach will allow for a sustainable, financially stable community, providing peace of mind for homeowners today and in the years to come.