Debt yield is NOI divided by loan amount — a leverage-independent measure of a lender's return relative to the loan size. Typical LA multifamily debt yield minimums: 7–9%.
Unlike DSCR (which uses debt service), debt yield uses NOI directly. This makes it interest-rate-neutral — a key advantage for lenders trying to assess risk across different rate environments. A $5M loan on a property with $400K NOI has an 8% debt yield.
LA multifamily lenders increasingly rely on debt yield alongside DSCR in 2026. DSCR can be manipulated by stretching amortization; debt yield cannot. Lenders typically require 7–9% debt yield minimums on LA multifamily, with pre-1978 RSO-constrained inventory at the higher end of that range.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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