How to determine replacement cost?

[Chris Braudis Jr]

Hi All!

One of the criteria I hear about a lot is to always make sure that you are buying below replacement cost. Can someone please explain what exactly people are referring to and how to calculate. 

E.g., Is this simply the average cost per square foot to build in the specific area I am looking to invest multiplied by the total square feet of the multifamily building? $250/sq. ft x 2500 sq. ft. = $625,000

Also, if someone could inform me of what the average cost to build is in southern Massachusetts is or point me in the direction of where to find it.

Many thanks and always learning!

Chris