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Whats in Your Reserve Wallet? The Key to Condominium Value


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Willie Sutton was a cult hero bank robber of the 1940's. He made use of ingenious disguises during his abrupt withdrawals. Those were the days when grand larceny took place in a bank lobby rather than the corporate boardroom. When a reporter asked him why he robbed banks Sutton is said to have replied, “Because that's where the money is. " Willie might readily agree that the health of the buildings and grounds of common interest developments is where the value is. We know that neglected reserves lead to deferred maintenance, leads to declining value. Ask any appraiser. But can capital improvements augment present value?

Depends on the improvement does it not? Adding a swimming pool having marginal market appeal and high operating costs would get low marks. Replacing tired looking wood siding with vinyl or composite material that perks up curb appeal and reduces operating costs is well worth considering. Or take the case of upgrading roofing from asphalt shingles to metal panels.

An association client in the North Country did just that to get away from perennial repairs caused by wind damage. A pricey initial investment, but the homeowners saw the long-term payoff as consistent with their outlook on things. Buyers of homes in the second phase of the development remark on the attractiveness of the roofs as they pay more for them. If you are considering an upgrade you will, of course, be gathering data. The format of the study would resemble a value engineering analysis. This analysis looks at what the present function is, what it costs, what else would accomplish the same function equally well and what that cost would be. Get accurate costs based preferably on past similar projects. But that may be the easy part compared with predicting the future technical performance of the challenger to your existing situation.

A product or construction that exceeded expectations somewhere else may be a dismal match for your specific environment. Suppliers and service providers who specialize in community interest developments are your best resource here. Beware of paralysis of analysis. Cut through the data to reach your conclusion but make sure it responds to your starting intention. We all know that sound conclusions are critically dependent on verified data. But we sometimes lose sight of that. I once had an engineer mentor who told me that when your solution looks more complex than the problem, it's time to check your data. Sutton was once nailed trying to rob the Corn Exchange Bank in New York disguised as a mailman. A wary teller alerted the police. The mailman had already been there that morning. Clearly, our Willie had not checked his data.


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