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What To Include In Hoa Reserve Fund Investment Policy

HOA reserve fund is a potential gold mine when invested wisely as it will not only cover equipment and other component replacement upon destruction but also present sizeable investment benefits like increased profits.

For your HOA’s reserve fund investment to be successful, you need an intricately tailored HOA reserve fund investment policy to guide it. For the policy to be effective, it must include all the aspects outlined below:

1. Investment policy goals:

Encompassed in the policy statement, your HOA reserve fund investment policy should contain your board members’ collective investment targets. Among the mandatory policy goals are:
To provide unfailing reserve fund principal’s security by ensuring there’s always sufficient cash in hand to cater for component replacement
To offer unequaled ease of reserve fund access and use by board members
To ensure the reserve fund gains incremental profit during investment.

2. Investment rules

The initial step in setting up a reputable reserve fund investment policy is identifying the ground rules that govern your operation. Reserve fund studies by dependable entities like Facilities Advisors, Inc. point that you’ll be required to comprehensively go through your association’s operational documents and state laws to find out the extent to which they provide for investment of reserve funds.  Also, you should present the information acquired to the other HOA board members for consideration.

3. Criteria for investment evaluation

As you set up your HOA reserve fund investment policy, keep in mind that it will not only serve the current association’s board members, but also future board members. This said, your HOA board should comprehensively brainstorm to come up with the most effective and adaptable investment evaluation criteria for current and future reserve fund investment.

4. Group decision making

Since your HOA reserve fund investment is a group venture, it’s paramount that each stakeholder’s take be considered in each investment step. Therefore, you should tailor your investment policy to include a clear-cut decision making process that incorporates all board members’ opinions and a final unanimous or majority verdict.

5. Investment’s contract details

Your association’s reserve fund investment is a form of business contract with the investment partner. To expedite current and future investment correspondence, your investment policy ought to outline the following particulars:
The investment’s size (assets and financial standing)
The maximum duration of the investment contract
Type of insurance cover your reserve fund investment seeks

6. Availability of liquid reserve funds  

Since the core function of reserve funds is to defray replacing worn out HOA components, it’s vital that your investment policy includes readily available and sufficient liquid reserve funds on hand to pay for these replacements.
In addition, you should ensure that the reserve fund’s purchasing power stays quipped to effectively cover all requisite component replacements with minimal acceptable risk.


Equipped with these 6 vital inclusions, you should be able to design and present your householders association a trustworthy HOA reserve fund investment policy that will not only channel sizeable profits your way but also expedite the investment processes.

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