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What is Deposit to Replacement Reserves?
Because buildings and their components don’t last forever, there are recurring appliance replacements, for example, for windows and heating, A/C system, and they’re also relatively one-time replacement items such as roofs.
Deposit to Replacement Reserves is a rainy day fund that is set aside to ensure that there is money available for when a replacement becomes necessary. So replacement reserves are usually deposited to a lender controlled account at roughly $200 to $500 per unit per year.
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Patrick Grimes is a design engineer and CEO and Founder of Invest on Main Street, LLC. His real estate holdings include general partner ownership of a multifamily and single-family real estate portfolio valued over $146M, including 1,950+ units across the southeastern United States and Texas.
He has been active in real estate investment since 2007, including purchasing land and distressed assets, renovating them, and stabilizing them for long-term cash flow. To scale his real estate portfolio, Patrick moved from single-family to multifamily investing and founded Invest on Main Street, a private equity firm specializing in multifamily value-add projects in emerging markets.