Updated over 2 years ago on . Most recent reply
👋 Yield on Cost Simply Defined
This metric helps answer the question if the return on capital invested in the project is sufficient to overcome a project’s initial cost.
This is beneficial to look at in development deals and value-add acquisitions.
The formula:
NOI / Total Project Cost
What’s a good Y.O.C.?
Keep in mind, this is subjective. What's considered a good YOC will vary with different investors.
Generally speaking, most investors would agree anything above 6% - 7% (stabilized) is acceptable.
Are you calculating YOC for your acquisitions?