👋 Yield on Cost Simply Defined

[Justin Goodin]

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?