Reserve Studies Protect Your Investment
When investing in a multi-unit property, preparing for the future is one of the most important things you can do. Many people find that their investment end up being a huge problem down the road as they haven’t planned for replacement or maintenance costs, cutting into their profits and causing them expensive surprises when they can least afford them. To get around this issue, most people commission reserve studies, studies that tell you how much costs will be down the road, letting you reserve your funds over time to pay off improvements and maintenance costs. By doing this you aren’t surprised at the future costs, you save over time so the hit to your finances is smaller, and you are better able to estimate your actual income.
These studies are generally pretty straight forward, but they do calculate more than the average person is able to think about. Most people won’t know the ins and outs of the law, when things need to be replaced, how often common use areas break down, or how often laws change and are likely to require you to upgrade a property. A study takes all of these things into account and ensures that you are better able to understand what you are getting into and allows you to build up a cushion that will protect you even if you need to replace a whole roof or all of the concrete in a courtyard.
Reserve studies help prevent you from getting into legal trouble, ensuring that you aren’t going to end up on the hook for expensive repairs when you didn’t know they were even going to be an issue. This saves you court costs as well as investment costs and generally helps protect your reputation as well. Don’t consider owned or investing in a multi-unit property unless you have had a study done, your bottom line will thank you.