Replacement Reserve Schedule
Adequate replacement reserves must be calculated regardless of whether actual reserves are provided for on the owner's operating statements or are customary in the local market. This represents the total average yearly reserves. Generally, all equipment and components that have a remaining life of more than one year-such as refrigerators, stoves, clothes washers/ dryers, trash compactors, furnaces, roofs, and carpeting, etc. - should be expensed on a replacement cost basis.
Equipment	Replacement Cost	Remaining Life		By Applicant/ Appraiser	Lender Adjustments

Stoves/Ranges	@ $ ea.	÷ Yrs.	x Units	= $	$
Refrigerators	@ $ ea.	÷ Yrs.	x Units	= $	$
Dishwashers	@ $ ea.	÷ Yrs.	x Units	= $	$
A/C Units	@ $ ea.	÷ Yrs.	x Units	= $	$
C. Washer/Dryers	@ $ ea.	÷ Yrs.	x Units	= $	$
HW Heaters	@ $ ea.	÷ Yrs.	x Units	= $	$
Furnace(s)	@ $ ea.	÷ Yrs.	x Units	= $	$
(Other)	@ $ ea.	÷ Yrs.	x Units	= $	$

Roof	@ $	÷ Yrs.	x One Bldg. =	$	$

Carpeting (Wall to Wall)			Remaining Life
(Units)	Total Sq. Yds.	@ $ Per Sq. Yd.	÷ Yrs.	= $	$
(Public Areas)	Total Sq. Yds.	@ $ Per Sq. Yd.	÷ Yrs.	= $	$

Total Replacement Reserves. (Enter on Pg. 1)				$	$
Operating Income Reconciliation

	$ Effective Gross Income	- $ Total Operating Expenses	= $ Operating Income	÷ 12	= $ Monthly Operating Income
	$ Monthly Operating Income	- $ Monthly Housing Expense	= $ Net Cash Flow
(Note: Monthly Housing Expense includes principal and interest on the mortgage, hazard insurance premiums, real estate getf_Taxes(), mortgage insurance premiums, HOA dues, leasehold payments, and subordinate financing payments.)
Underwriter's instructions for 2-4 Family Owner-Occupied Properties If Monthly Operating Income is a positive number, enter as "Net Rental Income" in the "Gross Monthly Income" section of Freddie Mac Form 65/Fannie Mae Form 1003. If Monthly Operating Income is a negative number, it must be included as a liability for qualification purposes. The borrower's monthly housing expense-to-income ratio must be calculated by comparing the total Monthly Housing Expense for the subject property to the borrower's stable monthly income.
Underwriter's instructions for 1-4 Family Investment Properties If Net Cash Flow is a positive number, enter as "Net Rental Income" in the "Gross Monthly Income" section of Freddie Mac Form 65/Fannie Mae Form 1003. If Net Cash Flow is a negative number, it must be included as a liability for qualification purposes. The borrower's monthly housing expense-to-income ratio must be calculated by comparing the total monthly housing expense for the borrower's primary residence to the borrower's stable monthly income.
Appraiser's Comments (Including sources for data and rationale for the projections)

Appraiser Name		Appraiser Signature			Date

Underwriter's Comments and Rationale for Adjustments

Underwriter Name		Underwriter Signature			Date

General Instructions: This form is to be prepared jointly by the loan applicant, the appraiser, and the lender's underwriter. The applicant must complete the following schedule indicating each unit's rental status, lease expiration date, current rent, market rent, and the responsibility for utility expenses. Rental figures must be based on the rent for an "unfurnished" unit.
	Currently Rented	Expiration Date	Current Rent Per Month	Market Rent Per Month	Utility Expense	Paid By Owner	Paid By Tenant
Unit No. 1	Yes No		$	$	Electricity
Unit No. 2	Yes No		$	$	Gas
Unit No. 3	Yes No		$	$	Fuel Oil
Unit No. 4	Yes No		$	$	Fuel (Other)
Total			$	$	Water/Sewer
					Trash Removal

The applicant should complete all of the income and expense projections and for existing properties provide actual year-end operating statements for the past two years (for new properties the applicant's projected income and expenses must be provided). This Operating Income Statement and any previous operating statements the applicant provides must then be sent to the appraiser for review, comment, and/or adjustments next to the applicant's figures (e.g. Applicant/Appraiser 288/300). If the appraiser is retained to complete the form instead of the applicant, the lender must provide to the appraiser the aforementioned operating statements, mortgage insurance premium, HOA dues, leasehold payments, subordinate financing, and/or any other relevant information as to the income and expenses of the subject property received from the applicant to substantiate the projections. The underwriter should carefully review the applicant's/appraiser's projections and the appraiser's comments concerning those projections. The underwriter should make any final adjustments that are necessary to more accurately reflect any income or expense items that appear unreasonable for the market. (Real estate getf_Taxes() and insurance on these types of properties are included in PITI and not calculated as an annual expense item) Income should be based on the current rents, but should not exceed market rents. When there are no current rents because the property is proposed, new, or currently vacant, market rents should be used.
Annual Income and Expense Projection for Next 12 months
Income (Do not include income for owner-occupied units)				By Applicant/Appraiser		Adjustments by Lender's Underwriter
Gross Annual Rental (from unit(s) to be rented)				$		$
Other Income (include sources)				+		+
Total				$		$
Less Vacancy/Rent Loss				- ( %)		- ( %)
Effective Gross Income				$		$

Expenses (Do not include expenses for owner-occupied units)
Electricity
Gas
Fuel Oil
Fuel (Type - )
Water/Sewer
Trash Removal
Pest Control
Other Taxes or Licenses
Casual Labor
This includes the costs for public area cleaning, snow removal, etc., even though the applicant may not elect to contract for such services.

Interior Paint/Decorating
This includes the costs of contract labor and materials that are required to maintain the interiors of the living unit.
General Repairs/Maintenance
This includes the costs of contract labor and materials that are required to maintain the public corridors, stairways, roofs, mechanical systems, grounds, etc.
Management Expenses
These are the customery expenses that a professional management company would charge to manage the property.
Supplies
This includes the costs of items like light bulbs, janitorial supplies, etc.

Total Replacement Reserves - See Schedule on Pg. 2
Miscellaneous








Total Operating Expenses				$		$