In real estate, one of the clearest indicators of long-term value isn't always the cap rate, it's the replacement cost.

When acquisition < replacement, you're instantly creating equity and protecting downside risk.

Formulas :
Replacement Cost = Land + Materials + Labor + Financing

Acquisition Cost = Price of the existing property

Example:
A 20-unit multifamily in Broward might cost $325K per door to build today.
If you acquire a stabilized asset for $250K per door, you're buying 23% below replacement, equity on day one.

In today's high-rate, high-cost environment, assets below replacement value are hard to replicate and often outperform over time.

When underwriting, do you anchor to replacement cost, or lean more on cap rates and rent growth metrics?