Replacement Cost Vs Purchase Price Calculator

Replacement cost benchmarks price. This calculator compares.

Purchase price

Replacement cost new

Accumulated depreciation %

Price / DRC %

110.77%

Depreciated replacement cost

$16,250,000

Premium ($+) or discount ($-)

$1,750,000

How the math works

DRC = replacement new × (1 − depreciation). Price/DRC %. Premium = price − DRC.

$18M price vs $16.25M DRC (35% depreciation on $25M new). 111% of DRC. $1.75M premium — modest, likely justifiable for location/operations. >125%: premium raises questions; under 100%: value buy territory.

How to Use

Enter purchase price.
Enter replacement cost new.
Enter accumulated depreciation %.
Read price vs depreciated replacement cost.

Frequently Asked Questions

Why compare?

Price below replacement = value buy. Price above replacement = paying premium. Applicable when new construction possible. Overheated markets: prices often above replacement (premium justified by rents). Undersupplied markets: below replacement → strong buy.

Depreciated?

New construction costs $X. Existing building age-adjusted: $X × (remaining life / total life). E.g., 15-year-old building with 30-year expected life: 50% depreciation from new. Buyer compares to depreciated, not pristine new.

Renovation gap?

Depreciated replacement cost + renovation capex = total cost to equivalent quality. If below purchase price: rehab makes sense. If above: buy existing (cheaper than replacing). Major guide to develop vs acquire decisions.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.