Understanding Your Reserve Fund
What Is a Reserve Fund?
A reserve fund is money your HOA sets aside for major repairs and replacements — things like a new roof, repaving the parking lot, or replacing an aging boiler. Think of it as your building's savings account for big-ticket expenses that you know are coming but don't happen every year.
Without adequate reserves, your association may be forced to levy special assessments — unexpected, often large charges to homeowners — when something breaks down. A healthy reserve fund prevents those surprises and keeps your community financially stable.
How Nestingbird Measures Reserve Health
Your Building Score includes a Reserve Health pillar that evaluates how well-funded your reserves are. The score considers:
- Percent funded — the ratio of your current reserve balance to the total you should ideally have, based on the age and expected lifespan of your building systems.
- Annual contribution rate — whether you're putting enough into reserves each year to stay on track. A baseline of at least 4% of your annual budget going to reserves is a common industry guideline.
- Capital project planning — whether you've identified upcoming major expenses and have a timeline for funding them.
Why 4% Matters
Industry guidelines suggest that at minimum, 4% of your annual operating budget should be allocated to reserves. Many well-managed associations contribute 10–25%, depending on the age and condition of their buildings. Nestingbird uses the 4% baseline as a starting point and rewards higher contributions in your score.
Getting Started
Head to your Dashboard to see your current reserve health score. From there, you can create a budget that includes reserve contributions, or add capital projects to plan for future expenses. Both of these actions will improve your score over time.
Plan Requirement
Your Building Score is available on all plans, including Basics.