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As-Is vs Renovated Value Calculator
Value-add deals live or die on the spread between as-is value (trailing NOI ÷ as-is cap) and stabilized value (projected NOI ÷ market cap). Subtract renovation and carry cost; the remainder is profit. This calculator also returns yield on cost — the lender's sizing metric for value-add loans.
Renovation profit
$4,590,909
Stabilized value
$13,090,909
As-is value
$6,000,000
Total value lift
$7,090,909
Total renovation + carry investment
$2,500,000
ROI on renovation
183.6%
Yield on cost (incremental)
12.00%
How the math works
Value-add analysis: as-is value vs post-renovation stabilized value. The difference (minus renovation cost and carry) is the profit. Yield on cost — incremental NOI divided by total investment — is the lender's sizing metric for a value-add loan.
Target YOC 150-250 bps above market cap rate. Example: 5% market cap → YOC target 6.5-7.5%. Below that, the risk-adjusted return doesn't justify the value-add effort.
How to Use
- Enter as-is and stabilized NOI.
- Enter as-is and stabilized cap rates.
- Enter renovation budget and carry cost during the work.
- Read profit, ROI, and yield on cost.
Frequently Asked Questions
Why two different cap rates?
As-is cap is typically higher (weaker property, more risk). Stabilized cap reflects renovated condition. The cap rate compression from as-is to stabilized is a material component of value creation — worth 20-40% of total value lift.
What YOC should I target?
150-250 bps above market cap rate. At 5% market cap, aim for 6.5-7.5% YOC. Below that, risk isn't compensated. Above 250 bps is exceptional and usually reflects deep value or off-market opportunity.
Include leasing costs?
Yes — TI, leasing commissions, and concessions are real renovation-era costs. Include in 'carry cost' or renovation budget. Skipping them inflates the apparent deal profit.
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