What the Debt Yield Means ?
The debt yield delivers an amount of jeopardy that is self-governing of the interest rate, amortization period, and bazaar value. Lower debt harvests indicate higher influence and therefore higher risk. Conversely, higher debt profits indicate lower leverage and therefore lower risk. The debt yield is used to ensure a loan amount isn’t exaggerated due to low market cap rates, short interest rates, or high amortization periods. The debt yield is also used as a common metrical value to compare risk relative to other loans.
What is The Debt Yield?
Debt yield is well-defined as a property’s net operating income separated by the total loan amount. Here’s the formula for debt yield: