Equity Yield Calculator
Loan Amount =
Interest/Year =
NOI =
Equity Invest =
Equity Yield =
Borrowing Costs =
Cash Flow Pre-Tax =
Help
Borrowing funds only makes sense when the funds increase the equity yield produced by an income property. This template calculates that amount.
Rows
- Loan Amount: Loan amount for the property.
- Interest/Year: Annual interest rate of the loan expressed as a percentage.
- NOI: Net Operating Income for the property.
- Equity Invest: Equity investment.
- Equity Yield: Equity yield expressed as a percentage.
- Borrowing Costs: Cost of borrowing or rather the total interest expense over the life of the loan.
- Cash Flow Pre-Tax: Cash flow before taxes.
Source
CCIM, Course Concepts Review Reference Manual, p 91
Examples
Considering improving a property with an equity yield of 25%. To expand, your client needs a $15 million loan at 9% interest. The property's net operating income is $4 million and has an equity investment of $8 million. Is it worth it?
- Loan Amount: 15,000,000
- Interest/Year: 9.0%
- NOI: 4,000,000
- Equity Invest: 8,000,000
The new equity yield is 33.125%, an improvement over the previous 25% yield. It's worth the costs of acquiring the loan.
Keywords
Loan Amount
Interest/Year
NOI
Equity Invest
Equity Yield
Borrowing Costs
Cash Flow Pre-Tax
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Net Operating Income
