Property Flip or Hold — How to Calculate Debt Yield

Debt Yield — Measures yearly net operating income (NOI) to the loan amount. This metric is used to determine the risk of a loan. Provides lenders a measure of risk independent of interest rate and amortization periods.

  Yearly Net Operating Income
÷ Loan Amount
------------------------------
= Debt Yield

    $112,330
÷ $1,440,000
------------
= 7.8%

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