Disposition Yield On Cost Calculator

YoC tests stabilization value. This calculator computes.

Stabilized NOI

Total cost basis

Exit cap rate %

Hold years

Yield on cost %

8.04%

Value created (disposition)

$9,500,000

YoC vs exit cap spread (bps)

204

How the math works

YoC = NOI / total cost. Disposition value = NOI / exit cap. Value created = disposition − cost.

$2.25M NOI / $28M cost = 8.04% YoC. $37.5M disposition value. $9.5M value created. 204 bps spread — strong development/value-add margin.

How to Use

Enter stabilized NOI.
Enter total cost basis.
Enter expected exit cap rate.
Enter hold years.
Read YoC and value creation.

Frequently Asked Questions

What is YoC?

Stabilized NOI / total cost basis = yield on cost. Development deals target YoC 150-250 bps above expected exit cap (spread = profit margin). Value-add: YoC 50-150 bps above exit cap. Below spread target: thin margin, elevated risk.

Spread?

YoC − exit cap = spread. Development: target 200+ bps spread. Value-add: 75-150 bps. Stabilized acquisition: tiny or no spread (pure yield play). Leveraged: spread multiplier on equity returns.

Interpretation?

7% YoC / 6% exit cap = 1% spread = weak margin. 8.5% YoC / 6% exit cap = 2.5% spread = healthy. 10% YoC on hard-to-replicate asset: exceptional. Use YoC to screen deals quickly.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.