Return on Equity (ROE): Real Estate’s Secret Formula for Success
There are lots of different ways to measure your return on investment in real estate.
Each one has its pros and cons and tells you different things about your investment.
You’ll hear lots of investors brag about how much cash flow they get from their properties.
Unfortunately cash flow by itself doesn’t tell you very much.
Cash-on-Cash Return (CoC)
Cash-on-cash is a pretty straightforward metric. It’s the amount of cashflow you make after expenses divided by how much you have invested in a property.
Internal Rate of Return (IRR)
IRR may be the single best way to compare different real estate projects to each other to see which one produces the best return.
Return on Equity (ROE)
Return on equity takes into account your overall return on investment given the amount of equity you have in a property.
REAL ESTATE RETURN ON EQUITY
real estate investor should be using return on equity to help them maximize their returns.
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