What does ROI stand for in real estate?

ROI in real estate stands for "Return on Investment." This metric is crucial for investors as it measures the profitability of an investment relative to its cost. The formula for ROI is typically calculated by taking the net profit from the investment and dividing it by the original cost of the investment, then multiplying by 100 to express it as a percentage.

For real estate, ROI helps investors assess how well their investment is performing and compare it to other investment opportunities. High ROI indicates that the property is generating strong income in relation to its purchase price, which is a key factor in investment decision-making. Understanding ROI allows investors to evaluate the potential profitability and make more informed decisions about buying, holding, or selling properties.