Return on Equity (ROE): Real Estate’s Secret Formula for Success

I think return on equity is the most important real estate metric you should measure for your rental properties.

The big question that real estate return on equity (ROE) allows you to answer is “when is it time to sell?”

You’ll hear lots of investors brag about how much cash flow they get from their properties.

Cash Flow

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.

Cash-on-Cash Return (CoC)

IRR may be the single best way to compare different real estate  projects to each other to see which one produces the best return.

Internal Rate of Return (IRR)

Return on equity in real estate blends the simplicity of cash-on-cash  returns with some of the benefits of longer term planning of IRR.

Return on Equity (ROE)

As you can see, trying to calculate your true returns in real estate and compare them to other investment options can be tricky.


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