--- title: Yield Definition | What Does Yield Mean? description: Yield is the return on an investment or the amount of profit, stated as a percentage of the amount invested. Learn more about Yield here. image: https://www.realized1031.com/hubfs/social-suggested-images/Realized_Glossary_Graphic-2.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Yield Yield is the [return on an investment](https://www.realized1031.com/glossary/return-on-investments-roi) or the amount of profit, stated as a percentage of the amount invested. Also known as the [rate of return](https://www.realized1031.com/glossary/rate-of-return). Yields can be depicted in a variety of ways including [levered](https://www.realized1031.com/glossary/financial-leverage) and unlevered and before tax and after tax. As example calculations, assume an investment property is acquired for $1,000,000 using $200,000 of [equity](https://www.realized1031.com/glossary/equity) and $800,000 of debt carrying a 5.0% interest-only rate. If the property generates [net operating income (NOI)](https://www.realized1031.com/glossary/net-operating-income-noi) of $80,000, then the unlevered yield is 8.0% ($80,000 NOI divided by $1,000,000 purchase price), and the levered yield is 20.0% ($80,000 NOI less $40,000 interest payment equals $40,000 divided by $200,000 of equity). Assuming the investor has a marginal tax rate of 30.0%, then the after-tax unlevered yield would be 5.6% ($80,000 NOI less $24,000 in income tax ($80,000 times 30.0%) equals $56,000 divided by $1,000,000 purchase price). Following this example, assuming the property generates $30,000 per year in [depreciation](https://www.realized1031.com/glossary/depreciation) allowances, then the property would produce an after-tax levered yield of 18.5% ($80,000 NOI less $40,000 of interest deductions less $30,000 of depreciation allowance equals $10,000 of taxable income times 30.0% marginal tax rate equals $3,000 tax liability. 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As example calculations, assume an investment property is acquired for $1,000,000 using $200,000 of equity and $800,000 of debt carrying a 5.0% interest-only rate. If the property generates net operating income (NOI) of $80,000, then the unlevered yield is 8.0% ($80,000 NOI divided by $1,000,000 purchase price), and the levered yield is 20.0% ($80,000 NOI less $40,000 interest payment equals $40,000 divided by $200,000 of equity). Assuming the investor has a marginal tax rate of 30.0%, then the after-tax unlevered yield would be 5.6% ($80,000 NOI less $24,000 in income tax ($80,000 times 30.0%) equals $56,000 divided by $1,000,000 purchase price). Following this example, assuming the property generates $30,000 per year in depreciation allowances, then the property would produce an after-tax levered yield of 18.5% ($80,000 NOI less $40,000 of interest deductions less $30,000 of depreciation allowance equals $10,000 of taxable income times 30.0% marginal tax rate equals $3,000 tax liability.", "author" : { "@type" : "Organization", "email" : "marketing@realized1031.com", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2022-06-20T16:22:06+0000", "datePublished" : "2022-06-20T16:22:06+0000", "description" : "Yield is the return on an investment or the amount of profit, stated as a percentage of the amount invested. Learn more about Yield here. 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