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Yield on Cost Calculator

Evaluate your multifamily investment by comparing stabilized NOI against total project cost. Determine whether the value-add or development premium justifies the execution risk.

Calculate Yield on Cost

Projected net operating income once the property is fully stabilized after renovations

$

Purchase price including closing costs

$

Total renovation or capital improvement budget

$

Carry costs, financing fees, or other project costs

$

Enter market cap rate to calculate spread and implied value

%

Result

Enter stabilized NOI and project costs to calculate yield on cost

How Yield on Cost Is Calculated

Yield on Cost = Stabilized NOI / Total Project Cost

Stabilized NOI

The projected annual net operating income once the property reaches full stabilization after renovations or lease-up. This should reflect the expected rent premiums from unit upgrades, market-rate vacancy, and normalized operating expenses.

Total Project Cost

The all-in cost to acquire and stabilize the asset. This includes the acquisition price, renovation budget, closing costs, carry costs during the renovation period, and any other costs needed to reach stabilization.

Yield on Cost Benchmarks

< 4.0%
Below Market
4.0 - 5.5%
Market Rate
5.5 - 7.0%
Attractive
> 7.0%
Highly Attractive

Benchmarks vary by market and property class. The key metric is the spread between YoC and the prevailing market cap rate — a 100-200+ bps spread typically indicates a worthwhile value-add opportunity.

This calculator shows one property.
Cai shows your entire portfolio.

BubbleGum BI tracks yield on cost, NOI growth, and value creation across every asset in your portfolio — with daily-updated financials and AI-driven diagnostics.

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Want to go deeper? Read our comprehensive yield on cost guide for renovation evaluation frameworks, institutional benchmarks, and how yield on cost compares to cap rate.

Frequently Asked Questions

What is yield on cost?
Yield on cost (YoC) measures the projected return on a real estate investment by dividing the stabilized net operating income by the total project cost (acquisition price plus renovation or development costs). It is commonly used to evaluate value-add and development deals.
What is a good yield on cost for multifamily?
For multifamily value-add projects, investors typically target a yield on cost that is 100-200 basis points above the market cap rate. If the market cap rate is 5%, a YoC of 6-7% or higher would be considered attractive.
What is the difference between yield on cost and cap rate?
Cap rate uses the current NOI and current market value, reflecting today's returns. Yield on cost uses the projected stabilized NOI and total project cost (including renovation), reflecting the expected return on the full investment.
How do you calculate total project cost?
Total project cost includes the acquisition price, renovation or construction costs, closing costs, carry costs during the renovation period, and any other costs required to reach stabilization.
Why is yield on cost important for value-add investors?
Yield on cost tells investors whether the premium they pay for renovation will generate sufficient returns. If the YoC is only marginally above the going-in cap rate, the value-add strategy may not justify the execution risk.