calculator

Yield on Cost Calculator

Calculate yield on cost and development spread from stabilized NOI, total project cost, and comparable market cap rate.

Project Assumptions

Enter all costs through stabilization and the projected annual NOI.

Land or Acquisition Cost ($)

Construction or Renovation Cost ($)

Soft Costs, Fees, and Contingency ($)

Financing and Carrying Costs ($)

Stabilized Annual NOI ($)

Calculate projected NOI with the NOI calculator.

Comparable Market Cap Rate (%)

Optional, but needed to calculate the development spread.

Results

Stabilized return on total project cost

8.00%

Stabilized Annual NOI ÷ Total Project Cost

Total Project Cost$4,500,000

Market Cap Rate6.75%

Development Spread+1.25%

Reading This Number

Yield on cost measures the return created by your business plan; it is not the same as a cap rate based on market value.
The development spread is yield on cost less the comparable stabilized cap rate.
Compare projects using the same stabilization date and the same rent-growth and expense assumptions.

Compare the project's return with the cash-on-cash calculator to see how financing changes the investor's actual cash return.

For informational and illustrative purposes only. Not financial, legal, tax, or investment advice.

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