Return on Investment

Measuring the performance of your investment in an easy to understand format is known as your Return on Investment or ROI. A number, expressed as a percentage of your total investment is generated by dividing the amount your investment is worth when you sell by the amount you paid when you bought and then multiplying the result by 100. Real estate investments can provide returns through capital gains and also through rental income. If you buy a house or apartment that you rent to generate income, you should include your net rent plus the difference in your purchase price and selling price to calculate your dollar profit. Your return on investment is the total profit divided by your total investment expressed in fractional terms. You must account for any repairs, maintenance, taxes, homeowner's fees and taxes before figuring your profit. ROI can be calculated or estimated for any period of time.