Real Estate Investing - Every Homeowner Is an Investor!
Whether you are looking to buy & hold, (those who purchase a property to rent it out); or buy, renovate & resell (most often contractors, investors buying distressed homes to fix & sell; and/or this can apply to everyday homeowners, who may not be renovating until several years later to resell)
Looking to obtain a return on your money, there are two ways to evaluate your property investment. You will ultimately consider both, but depending on the market you may lean upon one over the other. This will ultimately determine your investing goals.ROI - measures the gain or loss generated on an investment relative to the amount of money invested. ROI is usually expressed as a percentage and is typically used for personal financial decisions, to compare a company's profitability or to compare the efficiency of different investments.
Let's define ROI - Return on Investment
Let's define ROE - Return on Equity
ROE - Return on equity (ROE) is a measure of financial performance calculated by dividing net income by owners' equity. Because the owners' equity is equal to assets minus its debt, ROE could be thought of as the return on net assets.
ROE Calculation and Formula
Annual Cash Flow + Net Increase in Property’s Equity
Accumulated Equity Prior to Year
What is the difference ... one school of thought ... ROE is measuring your return on a changing number. The cash you put into the down payment hasn't changed, but over the years other factors do, and they change your return on equity. That is because your equity changes.
What type of investment are you looking for? Indianapolis is a great place to find that perfect investment property! Let us help you build your portfolio!!!
KEEP IN MIND,
if it's one property, or more, when you purchase a home,
you are investing in yourself, and the local community.
No matter your goals Home Indy Realty is here to help.
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