Operating result measures property income less expenses; cash flow after debt answers a different question about available cash.
Project a lease cash flow
Edit your assumptions. Results update immediately.
Annual result before income tax. Net operating yield excludes financing; after-debt cash flow deducts it. No appreciation or guaranteed occupancy is assumed. Saved data stays in this browser; this tool does not send it to the server.
Define the leased property and the scenario perspective
This tool is intended for someone evaluating income from letting their land to another party. First identify the property, the area actually handed over, the tenant activity and the obligations the owner would retain. Do not mix rent received for the land with sales from a business operated there: parking, cultivation or accommodation can have their own revenues and expenses requiring another model. Receiving rent also depends on the proposed activity being feasible in that location. In Medellín consult POT materials and mapping and obtain the review appropriate to the actual use. A private agreement does not replace any applicable authorisations. In another municipality, use its planning documents and responsible authorities. Also define who maintains roads, fences, drainage and services. Yield cannot be interpreted properly when every receipt is allocated to the owner while the owner’s obligations have no allowance, or are assumed to belong to the tenant without support. A clear perspective keeps this property model separate from an operating business forecast.
Choose a consistent investment base
Total invested is the denominator of operating yield. For a prospective purchase it can include price, confirmed acquisition costs and the works needed to make the property available for lease. Keep a breakdown so a reviewer understands what capital it represents. For land you already own, decide whether you are analysing actual historical investment or a supported current value, and label that choice outside the form. Two percentages with different denominators are not comparable even when monthly rent is identical. The calculator neither appraises the property nor verifies its tax basis, and it does not turn cadastral value into market value. Entering zero investment displays zero yield to avoid division by zero; it does not establish that the economic return is zero. The monetary operating result remains informative in that situation. Before adding future improvements to the denominator, confirm that they are necessary, defined and have a feasible service and land use route. This prevents an unsupported improvement proposal from being hidden inside one investment number.
Enter paid months and supported rent
Annual gross income is monthly rent multiplied by paid months. The field accepts zero to twelve months and can represent part of a month where that matches your assumption. Twelve months of physical occupancy does not guarantee twelve paid months: allow for grace periods, arrears, vacancy and discounts when preparing the input. The form uses constant rent and does not schedule receipts by date; for seasonal or changing rents, calculate a documented equivalent or use a separate monthly worksheet. It provides no demand evidence and cannot guarantee that an interested party will sign or pay. Obtain comparable evidence for use, location, access and services, distinguishing advertisements from executed agreements wherever that information is available. Have a lawyer identify the regime for the actual contract; the Supreme Court publishes commercial lease doctrine illustrating why contractual context matters. Do not transfer residential rules to every land lease or assume that an income timetable settles duration or termination. Those matters require their own documented analysis outside this financial calculation.
Enter the operating expenses that belong in the model
Annual operating expenses combine maintenance, property tax and charges, insurance, and management and other costs. Enter annual amounts even when a bill or supplier quotes by quarter or month; convert the period first and record the calculation. For Medellín property tax, use the assessment available through the Tax Portal and confirm the year or period instead of assuming a percentage of the land price. Elsewhere consult the relevant municipality. Maintenance can include defined road, vegetation or drainage work; insurance needs a quotation identifying coverage and exclusions; management covers administration and other costs you actually bear. Do not add a service the tenant pays directly when it belongs to neither your receipts nor your obligations. Equally, an expense does not disappear because it is not billed every month. The model does not automatically calculate indirect taxes, withholding or income tax. An adviser must establish the treatment, and all entered amounts should reflect a consistent basis before income tax. Keep the invoice period and contractual allocation visible with the scenario.
Distinguish operating yield from after-debt cash flow
The calculator subtracts operating expenses from gross income to obtain the annual operating result. It divides that result by total investment and multiplies by one hundred to express operating yield. This measure excludes financing and is calculated before income tax. Separately, annual cash flow after debt subtracts twelve monthly debt payments from the operating result. Enter the full planned cash payment under your financing arrangement; the form does not split principal and interest or certify their accounting treatment. It also does not divide after-debt cash flow by your equity contribution, so it does not display an equity return. Appreciation, resale proceeds and changes in debt are excluded. An owner using cash and an owner using a loan can have the same operating yield on investment but very different available cash. Use the two outputs to ask distinct questions: what the asset produces before financing and how much remains after the assumed debt payment. The separate figures make a funding shortfall easier to identify.
Check a hypothetical example from start to finish
Assume total investment of COP 360,000,000, monthly rent of COP 3,500,000 and ten paid months. Enter annual maintenance of COP 4,000,000, property tax and charges of COP 2,400,000, insurance of COP 1,200,000 and management of COP 2,400,000. These figures are illustrative, representing neither market rent nor tax assessments or insurance offers. Gross income totals COP 35,000,000 and expenses COP 10,000,000. The operating result is COP 25,000,000, approximately 6.94% of investment. With a monthly debt payment of COP 1,800,000, annual debt payments total COP 21,600,000 and cash flow after debt is COP 3,400,000 before income tax. Entering debt does not change the 6.94% because that indicator is operating yield. The annual average also does not establish that each month provides enough money for the instalment. Compare actual collection dates with payment deadlines and retain the tax bill and quotations that would replace these imaginary amounts in a real assessment. Their dates and scope are part of the result’s credibility.
Test nonpayment and expenses without calling them forecasts
In the same example, reducing paid months from ten to eight lowers income to COP 28,000,000. If expenses remain COP 10,000,000, the operating result falls to COP 18,000,000, yield becomes 5% and cash flow after debt becomes negative COP 3,600,000. A scenario that appeared to provide positive cash now needs additional funding. Under the original assumptions, expenses plus debt total COP 31,600,000; divided by monthly rent of COP 3,500,000, approximately 9.03 paid months are needed to balance annual cash before income tax. Calculate that threshold separately; it is not guaranteed occupancy. Also test a material expense such as drainage repairs borne by the owner. EPM provides service guidance, but an actual repair or connection needs its own assessment and budget. Decide what liquid reserve you would keep if collections were delayed; the tool neither creates that reserve nor shows a month-by-month balance. Change one variable at a time and record what evidence is still missing before treating the scenario as a basis for commitment.
Share the result with its exclusions
Download the scenario together with a summary of the proposed agreement, the included investment and evidence for each expense. Saving retains a version in this browser; it does not send the analysis to a tenant, bank or adviser. Record which outputs depend on an unsigned offer, unfinished works or an unconfirmed use. The Supreme Court commercial material is a reference for framing a legal review, not validation of your agreement or grounds for assuming automatic renewal. When comparing two properties, retain the same investment basis, collection period and allocation of obligations. A higher percentage can reflect omitted maintenance or greater uncertainty rather than a better opportunity. The next action should resolve the decisive question: check the activity against municipal planning, obtain a works quotation, review the agreement or adjust financing. Update the inputs when answers arrive. A documented cash flow enables a discussion of real conditions without presenting the assumed return as a promise to a prospective buyer or tenant.
Annual receipts, vacancy and extraordinary-expense sheet
Use a copy to detail the months and payments summarised by the calculator’s inputs. Operating yield remains separate from debt, income tax and appreciation. This worksheet neither forecasts occupancy nor guarantees collection.
| Item or decision | Information and evidence for your copy | Next check |
|---|---|---|
| Total investment used as the denominator | Acquisition and outlays included in investment, with date, scope and differences from own contribution. | Keep a consistent comparison base; operating yield on investment is not a return on personal equity. |
| Occupied months versus collected months | Calendar, rent, expected paid months, vacancy, arrears and available contractual evidence. | Count expected receipts without duplication and test fewer months; physical occupation does not always mean collection. |
| Recurring and extraordinary expenses | Maintenance, property tax, insurance, management, one-off repairs and periods without income, with amounts and evidence. | Separate extraordinary items in the copy and check whether they are already included in an annual calculator input. |
| Debt and payments outside the operating result | Complete monthly payment, debt months, additional financing costs and unmodelled obligations. | Check after-debt cash separately; do not attribute excluded tax or financing effects to the operating percentage. |
| Exit or lower-occupancy scenario | Fewer receipts, additional repairs, termination, restoration costs and funds available to cover the period. | Repeat assumptions and record differences; a positive percentage removes neither cash risk nor resale uncertainty. |
Sources & bibliography
Read the full document, its date, amendments and scope. The editorial review date describes this page; it does not establish an authorisation or a specific answer about your plot or financing.
- 01Alcaldía de Medellín · Plan de Ordenamiento Territorial y cartografíawww.medellin.gov.co · Medellín
- 02EPM · Servicio de aguas para constructores y urbanizadoreswww.epm.com.co · EPM service area
- 03Alcaldía de Medellín · Portal Tributario de la Secretaría de Haciendawww.medellin.gov.co · Medellín
- 04Corte Suprema de Justicia · Doctrina probable en materia comercialcortesuprema.gov.co · Colombia; commercial lease context