How to Calculate Debt Yield
To calculate debt yield, divide annual NOI by loan amount and convert it to a percentage. It shows income relative to debt, but it does not include interest rate, amortization, borrower strength, or lender review.
Estimates are based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, tax, or lending advice.
Run the number, then pressure-test the assumptions.
To calculate debt yield, divide annual NOI by loan amount and convert it to a percentage. It shows income relative to debt, but it does not include interest rate, amortization, borrower strength, or lender review.
Use this page to understand the metric directionally, then compare it against financing, reserves, repair risk, cash flow, and your own constraints.
Debt yield = annual NOI / loan amount
A property with $30,000 NOI and a $400,000 loan has a 7.5% debt yield.
Use the formula inside a full deal model
DealSharp helps compare assumptions, debt service, cash flow, and risk flags so this metric is not reviewed in isolation.
Open DealSharpHow to read this number
The useful move is not treating one number as a final answer. Use it to decide which assumptions deserve more review, then compare the result against cash flow, financing, reserves, repair risk, and your own constraints.
Inputs required
- Annual NOI.
- Loan amount.
- Clean expense assumptions used to calculate NOI.
Outputs explained
- Debt yield percentage.
- Income support relative to loan amount.
- Related context for DSCR and LTV.
Assumptions to review
- NOI excludes debt service.
- Loan amount matches the scenario being reviewed.
- The result is one metric among several financing checks.
What this tells you
- Debt yield helps compare income support across debt scenarios.
- It is less sensitive to rate changes than DSCR.
- It can identify loan amounts that need closer review.
What this does not tell you
- It does not include payment amount or amortization.
- It can mislead if NOI is inflated.
Common mistakes
- Using gross rent instead of NOI.
- Ignoring vacancy and operating expenses.
- Reviewing debt yield without DSCR or LTV.
FAQ
What is the first step?
Calculate NOI first, then divide NOI by loan amount.
Is debt yield only for commercial property?
It is common in commercial review, but investors can use it to compare rental debt scenarios too.
Run the full deal before deciding
This page helps with one metric or workflow. DealSharp is built for full real estate deal analysis: assumptions, financing, cash flow, repair scenarios, DSCR, cap rate, and risk flags based on your inputs.
Open DealSharpDisclaimer
DealSharp provides calculation and scenario-modeling tools for informational purposes only. Outputs are estimates based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, lending, tax, or accounting advice. Verify important decisions with qualified professionals.