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Return on Equity in Real Estate Investing


Definition: Return on equity is a percentage measure of the return received on a real estate investment property. It can be calculated on the first year's ownership based on the cash invested divided into the cash return from rents, etc.

It can also be calculated in subsequent years based on the projected value of the property less the mortgage balance. This the current equity investment you would have in the property adjusted by any increase in value and paydown of the mortgage.

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