Investing & Protecting Your HOA Reserve Funds: The Right Way To Do It

Investing & Protecting Your HOA Reserve Funds: The Right Way To Do It

[ Blog/News ]

Investing & Protecting Your HOA Reserve Funds: The Right Way To Do It

How you handle your HOA reserve funds really makes a difference in the successful running of your association. Managing HOA reserve funds is  important for the longevity and future investments of your association.

As a member of the board, it is your responsibility to stay on top of your reserve fund making sure it is regulated well and in the community’s best interests.

Understand When to Use Your Reserves

Is it a reoccurring expense?  Is it a capital improvement? A reserve fund is savings set aside for common area maintenance, repairs, replacements and unexpected repairs not covered by insurance.

HOA Reserve Fund Laws

Can an HOA invest money?  It depends on what your state laws are and your governing documents.  Some states have restrictions on which investments HOAs are permitted to take advantage of.  Always exercise prudent fiscal management when investing.

Your Investment Policy in the Bylaws

Check your governing documents, as they may include a policy on investments regarding your reserves. Every homeowners association should have an investment policy laid out in the governing documents.

It is very important to consider the following in order of its priority:

  • Safety above all else
  • Liquidity is a must
  • Consider yield last
Investing HOA Reserve Funds

HOA reserve funds don’t have to sit idly by.

Columbia Bank offers the Demand Deposit Marketplace (DDM), a sweep account that will provide FDIC Insurance up to $25 million in deposits. Funds over a target balance are swept out daily to the DDM account where funds will be invested amongst various FDIC insured financial institutions in $250,000 increments.

You will receive a monthly statement listing the names of the financial institutions and the dollar amount that is invested with each institution. This program will satisfy the HOA investment guidelines and provide you the safety, convenience and availability to your funds as you need them. End Of Article

By Columbia Bank

By Columbia Bank

Chapter Happenings Sponsor, September 2021

Columbia Bank works with management companies, associations and their Boards to develop appropriate lending and treasury management solutions.

Jill Jones, Lender jonesj@columbiabank.com
Becky Kost, Deposits rkost@columbiabank.com
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A Strong Reserve Fund Is The Strongest Hedge Against Inflation

A Strong Reserve Fund Is The Strongest Hedge Against Inflation

[ Blog/News ]

A Strong Reserve Fund Is The Strongest Hedge Against Inflation

What is a Community Association’s strongest hedge against inflation? A strong reserve fund! As of the end of April, 2021, increases in the pricing of lumber[1], asphalt binder[2], and other materials have risen well into the double digits when compared to the previous year. Costs for the “Big 9” projects (painting, roofing, asphalt, siding, windows, decks, plumbing, elevators, HVAC) are simply wild and unpredictable right now.

If your association is less than 50% funded, and any of these major projects are due within the next few years, get moving, now. Armed with a well-conceived scope of work, specifications, bid documents, and some time, you’ll stand a good chance of achieving the best value for project $$$ spent.

Strong reserves can hedge against significant price swings, and the extra costs of emergency work, Special Assessments, deferred maintenance, bank loans. Don’t be tempted to cut corners – I can confidently say after thirty plus years of experience, your best value is to hire a reputable consulting firm to oversee the process, and the work for these major projects.

Reserves are all too often thought of as for some distant “rainy day” event. Reserves are for the ongoing, measurable deterioration in your community, and should be thought of as real as any other bill of the association. Past the cautionary notes, there is good news if you are a part of a well-run, and well-funded community association. With Reserves Percent Funded of 70% or more, you have a 1% or less probability of a Special Assessment[3]. For these communities, the news gets even better. Our studies show that on average, resale prices are  ~12% higher than similar properties in their market area with weak reserves.

Think about that.

If you start with a median Seattle area condo unit value of $500,000 and to strongly fund reserves and building maintenance, have been paying ~$150 a month more in assessments over the last seven years than your weakly funded neighbors, you will have paid somewhere around $12,600 more, to realize a sales price $60,000 higher. That’s a nice return. Communities that understand this, and are proactive, vs. reactive, are: easier to live in, easier to manage, and as it turns out, likely a better investment! End Of Article


[1] Chicago Mercantile Exchange lumber futures
[2] WSDOT Asphalt Binder Reference Cost
[3] Association Reserves, Inc. database

By Association Reserves Washington, LLC

By Association Reserves Washington, LLC

Chapter Happenings Sponsor, May 2021

Written by Jim Talaga, RS

Learn more about Association Reserves WA at: www.reservestudy.com

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  • The Copeland Group - Banner Ad
  • Rafel Law Group - Banner Ad
  • HUB International NW - HOA And Condo Solutions - Web Ad
  • Condominium Law Group, PLLC - General Counsel & Collection Services - Partners Ken Harer & Valerie Oman - Phone: (206) 633-1520 Website: www.condolaw.net
  • Newman HOA CPA - Banner Ad

Search WSCAI


Search Business Partners Directory


Diamond Sponsors

  • Columbia Bank - Logo
  • Rafel Law Group PLLC - Logo
  • Transblue - Logo
  • CAU - Community Association Underwriters - Logo
  • ServPro Of Seattle NW - Logo
  • Newman HOA CPA - Audit & Tax - Logo
  • SageWater - Logo
  • CIT - Community Association Banking - Logo
  • RW Anderson Services - Logo
  • HUB International NW - Logo
  • Agynbyte - Logo
  • Association Reserves WA - Logo
  • Superior Cleaning & Restoration - A COIT Service Company - Logo

Chapter Magazine

Journal July-August 2022

Jul/Aug 2022 Issue

Journal Advertising Partners:

  • Newman HOA CPA Audit & Tax
  • CIT Group Inc. - Logo
  • Rafel Law Group PLLC - Logo
  • The Copeland Group - Logo
  • Bell-Anderson & Associates - Logo
  • Community Association Underwriters - Logo
  • Ruff Construction - logo
  • Charter Construction - Logo
  • Popular Association Banking
  • SSI Construction
  • Sagewater
  • RW Anderson Services - Logo
  • Pacific Engineering Technologies, Inc - Logo

  • Pacific Western Bank - Small Ad
  • Association Reserves of Washington - Ad