Investor Encyclopedia

Yield On Cost

Yield On Cost: a practical Canadian real estate investor guide to definition, deal math, underwriting use, common traps, and Realist.ca implementation.

Definition

Yield on cost is stabilized NOI divided by total project cost. It tells you whether your basis creates value versus buying a stabilized asset.

Formula

Yield on cost = stabilized NOI / total project cost.

Example

In underwriting, tag yield on cost beside the exact source input and rerun the model when that input changes. The point is not a pretty metric; it is a better buy, hold, refinance, or walk decision.

Why It Matters

yield on cost changes what a disciplined buyer can pay, how much debt the asset can safely carry, and whether the return is coming from operations or fragile assumptions.

Investor Interpretation

The investor question is simple: does stabilized NOI on your all-in cost beat the market cap rate by enough to justify the work, time, and risk? If not, you bought a job, not value creation.

Realist Tie-In

Realist.ca can make yield on cost searchable as an encyclopedia entry, link it to property underwriting, and show it beside listings, saved analyses, market pages, and investor lead magnets.