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What's a reasonable amount of cash on hand for a condo association?

Posted on Wed, Jan 20, 2010 @ 06:42 AM
  
  
  
  
  
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I have a question about retained earnings. Our condo association presently has what I consider an excessive amount of retained earnings on our balance sheet . We have in excess of $60,000 plus $29,000 in working capital plus monthly revenue of $41,000 to meet a monthly condo association budget of $41,000. Obviously we have made a profit against expenses every year (2 to 5%), in spite of this we have continued to raise condo maintenance fees . What should be considered a reasonable amount of retained earnings ? Is there a formula to be considered ?
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If by “retained earnings” you mean your reserve account for replacement of common area components,then the number you need to have to know where you stand is an analysis of present funds (APF). The APF is generated by computing the remaining service lives of your common area components and how much you need to have in reserve today to replace them when the time comes to do so. The APF compares what you have in reserve account today vs. what the computed amount should be, aka Percent of Fully Funded. A capital reserve study will do that for you plus compute what your monthly contribution to reserve should be. That monthly contribution is the “formula” you are looking for. It is unique to every association.
Posted @ Wednesday, January 20, 2010 9:53 AM by Bob Burns, P.E., R.S.
By retained earnings , I meant money which is not earmarked for reserves , assessments or projects. This is money generated from over estimating expenses and continually raising the operating budget which results in higher maintenance fees each year . We have reserves properly calculated .
Posted @ Wednesday, January 27, 2010 6:37 AM by andy piecuch
Is there a common formula for determining your reserve needs for long tern unfunded liabilities
Posted @ Tuesday, October 19, 2010 7:49 PM by Guy Shinn
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