Replacement Reserve Ratio Calculator

Replacement reserves are the NOI line underwriters insist on and most sellers conveniently forget. They fund roof, HVAC, paving, appliances, and other long-cycle components. This calculator sizes per-unit, per-SF, and reserve-to-EGI ratios and compares them to age-adjusted benchmarks.

Reserve / unit / year

Number of units

Effective gross income

Total rentable SF

Asset age (years)

Annual reserve total

$12,000

Reserve / EGI

1.67%

Reserve per SF

$0.38

Age-based recommended reserve

$16,000

Reserve vs recommended (gap)

-$4,000

How the math works

Replacement reserves fund long-cycle capex — roof, HVAC, paving, appliances, water heaters. Fannie and Freddie multifamily loans require $250-$350 per unit per year depending on vintage and condition. Older or deferred-maintenance assets need $400+.

Using too-low reserves in underwriting inflates NOI and overstates value. The calculator compares your chosen per-unit figure to age-based benchmarks.

How to Use

Enter reserves per unit per year (lender requirement or your own estimate).
Enter unit count, EGI, SF, and asset age.
Read the reserve total and comparison to age-based benchmark.

Frequently Asked Questions

Fannie/Freddie minimum?

Typically $250-$300/unit/year for garden-style multifamily in average condition. Older or deferred-maintenance assets can require $400+. Always verify with the specific lender.

Reserve vs capex budget?

Reserve is an annual NOI deduction that averages capex spending over time. Actual capex comes in lumps (roof year 18, HVAC year 12). Reserves smooth this for underwriting and investor distributions.