Is Your Equity Working for You? Now’s the Time to Review Your ROE

Now is the perfect time to review your Return on Equity (ROE)—not just your Return on Investment (ROI). While ROI is a key factor when purchasing a new real estate investment, many property owners overlook ROE as the years go by.

If you purchased your property more than 3–4 years ago, chances are it has appreciated significantly. In most markets, that appreciation has increased your equity position—but is that equity working as hard for you as it should be? Have rents kept up with property values? In many markets, the answer is no. While property values may be up 30%, rents may have only increased 10%. This means your ROE is likely much lower than your initial ROI.

How to Calculate Your ROE

With tax season here, it’s an easy time to check:

1. Take your net profit (after expenses).

2. Add back any principal reduction from your loan.

3. Divide the result by your property’s current market value.

If your ROE isn’t hitting your target, it may be time to rebalance your portfolio and explore better opportunities.

What’s Next?

Understanding your ROE can help you decide if your capital is best utilized in its current investment or if it could be leveraged more effectively elsewhere. Whether it’s reinvesting in new opportunities, refinancing, or assessing your long-term strategy, now is a great time to take a closer look.

If you’re curious about your property’s current equity position and how to maximize it, let’s chat! I’d love to help you analyze your ROE and explore ways to make your real estate work harder for you.