Return on Equity

Real Estate’s Secret Formula for Success

Real estate investors love to brag about their cash flow or cash-on-cash returns.

But for my money I think return on equity is the most important real estate metric you should measure.

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


Here are some of the main ones you’ll hear thrown around:

1.  Cash Flow

Unfortunately cash flow by itself doesn’t tell you very much.

It’s the amount of cashflow you make after expenses divided by how much you have invested in a property.

2.  Cash-on-Cash Return

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

3.  Internal Rate of Return

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.

4.  Return on Equity

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