Replacement Reserves in Relation to the Freddie Mac SBL Program
Replacement reserves are funds allocated for the repair and replacement of parts of a commercial building; in particular, those that will need to be replaced multiple times over the useful life of the structure. All Freddie Mac Multifamily loans, including loans issued through the Optigo Small Balance Loan program, require replacement reserves. In general, properties eligible for SBL financing will need to set aside $200-$300/unit on an annual basis. For instance, a 10-unit apartment building would likely have to allocate $2,000 to $3,000 each year for replacement reserves.