Investment ROI Calculator
ROI Results
Total Return on Investment (ROI)
Net Profit
Annualized ROI
Understanding Return on Investment (ROI)
Return on Investment (ROI) is the foundational metric used to evaluate whether a real estate deal is worth making. It measures how much profit you generated relative to the capital you deployed — expressed as a percentage — making it easy to compare properties of different sizes and prices.
How to Calculate ROI
Calculating ROI involves dividing your net profit by your original investment cost. The formula is:
ROI = (Final Investment Value - Initial Investment Cost) / Initial Investment Cost
This result is expressed as a percentage, which lets you compare different investments on equal footing regardless of their absolute size.
What is Annualized ROI?
Standard ROI tells you the total return but ignores time. A 50% return over 10 years is far less impressive than a 50% return over 2 years. Annualized ROI (also called CAGR — Compound Annual Growth Rate) solves this by expressing your return as an equivalent yearly rate, enabling fair comparison across investments held for different periods.
Annualized ROI = [(Final Value / Initial Value)^(1 / Years)] - 1
Frequently Asked Questions (FAQ)
Is a higher ROI always better?
Generally yes, but a higher ROI must be weighed against its risk profile. Exceptionally high returns in real estate often come with higher vacancy risk, more intensive management requirements, or properties in less stable markets.
Does ROI definitively account for inflation?
Standard ROI is a nominal figure — it does not adjust for inflation. To evaluate real (inflation-adjusted) returns, you would subtract the prevailing inflation rate from your annualized ROI, which gives you the real rate of return.