HOA Reserve Funding: Is 70% a Myth? | Ep. 101

Is 70% funded really the gold standard for HOA reserves?

In this episode of The Uncommon Area, Matthew Holbrook sits down with Andrew Stoutenburg of Reserve Advisors to take a closer look at what percent funded actually measures, where it falls short, and why many well-run communities never climb above 30% funded. As Andrew puts it, the goal is having the right money at the right time.

Matthew and Andrew cover why even brand-new communities need a reserve study, how percent funded is calculated, and what it really means to be adequately funded. Andrew also breaks down the Fannie Mae and Freddie Mac move from 10% to 15% of condo assessments going to reserves, the difference between Level 1, Level 2 and Level 3 reserve studies, and how boards should handle repairs, upgrades and aging systems like plumbing.

In this episode:

- Why reserves matter from day one

- How percent funded works and where it can mislead

- Reserve rules in Texas and California

- New Fannie Mae and Freddie Mac condo requirements

- The three levels of reserve studies

- Repairs vs. replacements vs. upgrades

- The five or six assets that drive your reserve funding

Chapters

00:00 Welcome to The Uncommon Area

00:24 Why every association needs a reserve study

01:11 New communities and owners who plan to move

04:16 What percent funded means

08:30 Where percent funded falls short

09:56 What "safe" and adequately funded really mean

12:29 Baseline threshold and full funding plans

18:07 Reserve rules in Texas and California

18:55 New Fannie Mae and Freddie Mac condo requirements

22:49 When lenders expect a reserve study

25:29 Level 1 reserve studies

27:01 Level 2 updates with a site visit

29:05 Assets that were never reserved for

31:19 Why maintenance records matter

33:32 Major repairs vs operating expenses

39:01 Upgrades vs capital improvements

43:31 The 30 to 40 year funding horizon

45:21 Focus on your five or six biggest assets

48:10 Level 3 updates without a site visit

50:17 Portfolio managers and reserve study data

53:46 Closing thoughts

More on Andrew at Reserve Advisors: https://www.reserveadvisors.com/who-we-are/our-team/andrew-stoutenburg-pe-rs/

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