What is an adequate amount in current reserves for a 20 year old 240 unit highrise condo?

Answer 1

the right answer is impossible to provide with the information given, however it would be reasonable to expect that from your annual operating budget about 8% to 10% should be allocated to some form of contingency fund to provide for capital replacements and major upgrades.

The estimated life of most of your larger mechanical equipment will be between 15 and 25 years, so your building is right in the middle of a number of required replacements or major repairs. the same will apply to roofs, windows, and common area upgrades.

Dependent on how much of this cycle of replacements and repairs are completed or to be done, you will then be able to ball park how much is still to be done and then you can go to the market place and estimate the current cost for these replacements/repairs. Keep in mind that dependent on where you are that the costs are sky-rocketing in many areas of Canada, due to the boom in the construction industry and trades are charging whatever they can get away with, so rapid increases in costs may trigger a faster or slower replacement cycle, dependent on the condition of the building.

In BC. where I am, the strata property act requires that strata corporations have 10% of their annual budget is placed in a contingency reserve. In the past this used to be 5% of the budget, but due to the cost increases and shorter life expectance of the major equipemnt, building envelope failures etc. Many of the buildings had to charge additonal levies to be able to afford the required replacements of roofs.
This triggered the property managers and real estate industry advisors to lobby with the politicians to amend the contingency fund allocations to 10%, which over time will proof to be about the right amount, dependent of the size of the building and construction type.

So although not an easy answer, hopefully this will give you some indication as to what to do and how to establish a method to ensure a proper reserve for the long term.

Good Luck

Answer 2

I would think that assuming all units are occupied, you would want to set aside about $1,000/unit per year or slightly less than $100 per month per unit.

Are there any structural projects scheduled? What condition is the roof in? The worse thing financially that could happen to everyone is a special assessment due to improper planning by the Treasurer.

Answer 3

I think 5% a month is what a bank would say. But I can't find my information on this right away. I would assume 5% a month as a ball park figure. Roofs are probably needing done, and other things.