Yield On Cost Drift

The reason your deal looks good—but is actually dying slowly

If you think your property is improving over time just because rent is going up, you’re missing what’s really happening. And that’s exactly what trips up investors.

Yield on Cost Drift is the moment you realize your returns aren’t increasing—they’re eroding. Not because there’s no income, but because your expenses are catching up faster.

Taxes go up. Insurance spikes. Maintenance gets more expensive. CapEx accumulates. Management fees increase. Regulation starts eating into your margins.

And you? You see an extra $50 in rent and think you’ve won.

In reality—you’ve lost.

Because if income went up 5%, but expenses went up 15%, your yield is being eroded—even if your NOI still looks “fine” on paper.

And this is the big mistake.

Most investors measure success by what comes in. Smart investors measure what actually stays over time.

That’s the difference between a property that works—and one that slowly bleeds without you even noticing.

The real danger isn’t a bad deal.

The danger is a deal that looks good—because that’s when you fall asleep.

And then comes the moment:
a refinance that doesn’t work, cash flow that gets squeezed, or worse—a forced sale at the wrong time.

This isn’t theory. It happens every day in the market.

Anyone who isn’t analyzing expense growth vs. rent growth, who isn’t controlling costs, and who isn’t planning ahead—is playing a game they’ve already lost.

A real investor asks:

• How do I stop the erosion before it starts?
• How do I shift or control expenses?
• How do I choose the right market?
• How do I maintain a stable—or growing—yield over time?

That’s the difference between just doing another deal—and having a real strategy.

And this is an integral part of my work with investors—not just finding a property, but making sure it doesn’t quietly wear you down from the inside, financially and mentally.

Because if you’re not checking this—you don’t really know how much you’re making.

And if you don’t know, someone else in the deal does.

And they’re the one actually making the money.