SS233: What Is Yield on Cost?

Global Investors: Investing in U.S. Real Estate

Most real estate investors rely on cap rates. That’s a mistake.

In this Strategy Saturday episode, Charles Carillo introduces a powerful underwriting tool that experienced investors use to avoid bad deals: Yield on Cost.

You'll learn:

• What Yield on Cost (YOC) actually is

• How it's different from cap rate

• When and how to use it in your underwriting

• What makes a “good” YOC spread

• How YOC helps you evaluate risk and make smarter offers

Whether you're analyzing your first deal or scaling your multifamily portfolio, this episode will help you apply short-term, data-driven thinking to your investment strategy.

🔑 Key Takeaways:

• YOC vs Cap Rate: Why cap rate can mislead you

• The formula to calculate YOC properly

• Why a strong spread between YOC and market cap rate matters

• When to adjust the spread based on market type and renovation risk

• How to use YOC as a quick deal filter, even in off-market scenarios

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