Operating Yield

NOI as a percentage of purchase price.

Example Result

Sample Data

5.34%

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

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Operating Yield Formula

NOI / Purchase Price x 100

$20,566 / $385,000 x 100

5.34%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a operating yield of 5.34% at Purchase (Month 0). Over time, this metric only gets better. As rents increase and your purchase price stays fixed, your operating yield improves year after year. It shows how smart your original purchase decision was.

Where This Value Comes From

Operating Yield is not entered directly — it is calculated from Net Operating Income and Purchase Price. See the formula breakdown above and the detailed inputs below.

Inputs That Determine Operating Yield

Net Operating Income

Income remaining after all operating expenses but before debt service.

$20,566

Purchase

Purchase Price

The agreed-upon price to acquire the property.

Found on your purchase contract / hud-1

$385,000

Purchase

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Why It Matters

Over time, this metric only gets better. As rents increase and your purchase price stays fixed, your operating yield improves year after year. It shows how smart your original purchase decision was.

Detailed Explanation

Operating Yield measures the property's operating income (NOI) relative to what you actually paid for it, as opposed to its current market value. Over time as the property appreciates, operating yield (based on your cost basis) will diverge from cap rate (based on market value).