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What's the difference between total Return on Investment (ROI) and Equity Return (ROE)?


These calculations are used in the real estate world to figure out how well investments are doing. They help you see if your money is being used wisely and if your property is making a good return on your money.


ROI measures how much profit you make from a certain real estate investment. You find this out using a simple formula: (the profit you receive - the total investment cost / total unit price). It shows you whether your real estate investment is making good returns.


ROE gives you a ratio of current investment performance, as the money invested in the property is calculated up to the current point in time. To calculate ROE, you use a simple formula: (profit from the property / money invested in the property). This formula result tells you how much you earned from your property based on the money you've put in so far.


While both ROI and ROE are used to see how well real estate investments are doing, they have differences. ROI looks at the total investment cost and profit, whereas ROE focuses on the money invested up to a certain point in time.


In summary, ROI and ROE are useful tools for calculating how successful real estate investment is. ROI checks whether one investment makes good returns, while ROE looks at how well the property makes money from the money invested. Knowing these differences helps real estate people make smarter financial decisions.




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