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Real Estate Glossary

Average Rate of Return

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Written by Luis Escobar

This measures the profitability of a real estate investment. To calculate it, take the total net profit of an investment (subtract the total cash outflow from the total cash inflow) and divide it by the length of the investment. Then, divide this by the invested capital. Keep in mind that this metric does not take the time value of money into account.

This measures the profitability of a real estate investment. To calculate it, take the total net profit of an investment (subtract the total cash outflow from the total cash inflow) and divide it by the length of the investment. Then, divide this by the invested capital. Keep in mind that this metric does not take the time value of money into account.

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Luis Escobar

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