Return on Equity Calculator

✖Annual Return refers to the total percentage change in the value of an investment property over a year, considering both rental income and any capital appreciation or depreciation.ⓘ Annual Return [AR]			+10% -10%
✖Total Equity is the difference between the property's market value and the outstanding mortgage or debt, representing the owner's ownership stake or net worth in the property.ⓘ Total Equity [TE]			+10% -10%

✖Return on Equity is a financial metric that evaluates the profitability of an investment property by comparing its net income to the equity invested by the property owner.ⓘ Return on Equity [ROE]

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Formula

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Return on Equity

Formula

`"ROE" = "AR"/"TE"`

Example

`"0.372979"="87650"/"235000"`

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Return on Equity Solution

STEP 0: Pre-Calculation Summary

Formula Used

Return on Equity = Annual Return/Total Equity
ROE = AR/TE
This formula uses 3 Variables

Variables Used

Return on Equity - Return on Equity is a financial metric that evaluates the profitability of an investment property by comparing its net income to the equity invested by the property owner.
Annual Return - Annual Return refers to the total percentage change in the value of an investment property over a year, considering both rental income and any capital appreciation or depreciation.
Total Equity - Total Equity is the difference between the property's market value and the outstanding mortgage or debt, representing the owner's ownership stake or net worth in the property.

STEP 1: Convert Input(s) to Base Unit

Annual Return: 87650 --> No Conversion Required
Total Equity: 235000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

ROE = AR/TE --> 87650/235000

Evaluating ... ...

ROE = 0.372978723404255

STEP 3: Convert Result to Output's Unit

0.372978723404255 --> No Conversion Required

FINAL ANSWER

0.372978723404255 ≈ 0.372979 <-- Return on Equity

(Calculation completed in 00.004 seconds)

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Created by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has created this Calculator and 50+ more calculators!

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< 15 Important Formulas of Mortgage and Real Estate Calculators

Monthly Mortgage Payment

Go Monthly Payment = (Mortgage Amount*Interest Rate*(1+Interest Rate)^Compounding Periods)/((1+Interest Rate)^Compounding Periods-1)

Break Even Ratio

Go Break Even Ratio = (Debt Servicing Costs+Operating Expenses)/Gross Operating Income

Debt Service Coverage Ratio using ADS

Go Debt Service Coverage Ratio = Net Operating Income-Annual Debt Service

70 Percent Rule

Go Maximum Buying Price = (After Repair Value*0.7)-Estimated Repair Costs

Capitalisation Rate

Go Capitalisation Rate = (Net Operating Income/Current Market Value)*100

Gross Rent Multiplier

Go Gross Rent Multiplier = Property Value/Potential Gross Rental Income

Loan to Value Ratio

Go Loan to Value Ratio = (Mortgage Amount/Appraised Property Value)*100

Price per Square Foot

Go Price per Square Foot = Property Sale Price/Total Square Footage

Price to Rent Ratio

Go Price to Rent Ratio = Median Home Price/Median Annual Rent

Rental Yield

Go Rental Yield = (Annual Rental Income/Property Value)*100

Land to Building Ratio

Go Land to Building Ratio = Area of Land/Area of Building

Commission Value

Go Commission Value = Commission Rate*Final Sale Price

Floor Area Ratio

Go Floor Area Ratio = Gross Floor Area/Total Lot Size

Return on Equity

Go Return on Equity = Annual Return/Total Equity

Debt Ratio

Go Debt Ratio = Total Debt/Total Assets

Return on Equity Formula

Return on Equity = Annual Return/Total Equity
ROE = AR/TE

What is Return on Equity ?

Return on Equity (ROE) in real estate is a key financial metric that measures the profitability and efficiency of an investment property by comparing the net income generated by the property to the owner's equity in the property. It provides valuable insights into how effectively the property is utilizing the owner's invested capital to generate returns. A higher ROE indicates better profitability and efficient use of equity, making it a critical factor for real estate investors in evaluating the performance of their property investments and making informed decisions about portfolio management and investment strategies.

How to Calculate Return on Equity?

Return on Equity calculator uses Return on Equity = Annual Return/Total Equity to calculate the Return on Equity, The Return on Equity is the difference between the property's market value and the outstanding mortgage or debt, representing the owner's ownership stake or net worth in the property. Return on Equity is denoted by ROE symbol.

How to calculate Return on Equity using this online calculator? To use this online calculator for Return on Equity, enter Annual Return (AR) & Total Equity (TE) and hit the calculate button. Here is how the Return on Equity calculation can be explained with given input values -> 0.372979 = 87650/235000.

FAQ

What is Return on Equity?

The Return on Equity is the difference between the property's market value and the outstanding mortgage or debt, representing the owner's ownership stake or net worth in the property and is represented as ROE = AR/TE or Return on Equity = Annual Return/Total Equity. Annual Return refers to the total percentage change in the value of an investment property over a year, considering both rental income and any capital appreciation or depreciation & Total Equity is the difference between the property's market value and the outstanding mortgage or debt, representing the owner's ownership stake or net worth in the property.

How to calculate Return on Equity?

The Return on Equity is the difference between the property's market value and the outstanding mortgage or debt, representing the owner's ownership stake or net worth in the property is calculated using Return on Equity = Annual Return/Total Equity. To calculate Return on Equity, you need Annual Return (AR) & Total Equity (TE). With our tool, you need to enter the respective value for Annual Return & Total Equity and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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