Yield on Cost

NOI divided by total all-in cost including closing and rehab.

Example Result

Sample Data

5.13%

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

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Yield on Cost Formula

NOI / All-In Cost x 100

$20,344 / $396,550 x 100

5.13%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a yield on cost of 5.13%. For properties requiring renovation, yield on cost is the true return metric. You might buy at a 5% cap rate but after $30K in rehab and increased rents, your yield on cost could be 8%. This helps evaluate value-add deals accurately.

Where This Value Comes From

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

Calculated From

Yield on Cost is calculated using these inputs:

Net Operating Income

Income remaining after all operating expenses but before debt service.

$20,344

Purchase Price

The agreed-upon price to acquire the property.

Found on your purchase contract / hud-1

$385,000

All-In Cost

Total investment including purchase, closing costs, and rehab

$396,550

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Why It Matters

For properties requiring renovation, yield on cost is the true return metric. You might buy at a 5% cap rate but after $30K in rehab and increased rents, your yield on cost could be 8%. This helps evaluate value-add deals accurately.

Detailed Explanation

Yield on Cost divides NOI by the total all-in cost (purchase price + closing costs + rehab). For value-add investors, this is more meaningful than cap rate because it reflects the true total investment, not just the purchase price.