Calculate these two metrics?
Hey WSO Community,
im new to the real estate world and trying to learn as much as possible and keep running into new metrics that I’m unsure of. Can anyone walk me through how to calculate ROI on value add properties, more specifically office and industrial? And how to calculate yield on cost? Thanks!
-A non-finance college student
ROI and yield on cost are the same metric, also known as development yield and return on cost.
NOI / Total Project Cost (I.e. for value add - purchase price plus any closing costs, plus the costs of your value add program)
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