Real Estate ROI: How to Analyze Your Next Deal

Real estate can be a great wealth builder, but only if the numbers make sense. Don't let emotions cloud your financial analysis.

Cash-on-Cash Return

This measures the annual pre-tax cash flow relative to the total amount of cash invested. It's a more accurate measure of performance than simple appreciation.

Factoring in Vacancy and Maintenance

Always assume at least a 5-10% vacancy rate and set aside funds for ongoing maintenance. If the deal doesn't work with these assumptions, it's not a good deal.