The Metric That DECREASES As You Own A Property

Passive Real Estate Strategies

May 1 2023 • 5 mins

Are you interested in building wealth through passive real estate investing? If so, then you need to understand the critical metric of return on equity. In this episode, we delve into how return on equity can help investors determine the effectiveness of their investments in putting money to work. While cash on cash return is a common metric, return on equity is different as it decreases as a property is held long term. This episode is essential listening for career-driven individuals looking to build wealth through real estate investments without compromising their time or taking on additional responsibilities. We'll explore how to calculate return on equity and other ways to effectively deploy your locked-up equity. Check out our free ebook on passive real estate investing in the show notes and join us next week for another exciting episode of the Passive Real Estate Strategies Podcast!

Key Highlights:

[00:01 - 05:33] Maximizing Your Equity: How to Make Educated Investing Decisions

• Cash on cash return is a common metric used by investors

• Cash flow return on investment (ROI) jumps from 12% to 16%

• For locked-up equity, take into account other investment opportunities

Key Quotes:

"You should always ask yourself if there are other opportunities that equity would be more effectively deployed in, and use return on equity as another metric you can use to make educated investing decisions." - Justin Moy

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