ROI Investment Terms in Real Estate Return on Investment

ROI_Investment_Terms_in_Real_Estate,Return on Investment Return on investment ROI What does return on investment mean? A performance measure used to evaluate the efficiency of investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. The return of investment formula: ROI equals gain from investment minus cost of investment divided by cost of investment. Gain from investment refers to the proceeds obtained from selling the investment. Return on investment is a very popular metric because it of its versatility and simplicity. If an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should not be undertaken. Keep in mind that the calculation for return on investment and, therefore the definition, can be modified to suit the situation. It all depends on what you include as returns and costs. The definition of the term in the broadest sense just attempts to measure the profitability of an investment and, as such, there is no one "right" calculation. For example, an investor may compare two different products by dividing the gross profit that each product has generated by its respective expenses. A financial analyst may compare the same two products using an entirely different ROI calculation, perhaps by dividing net income of an investment by the total value of all resources that have been employed to make and sell the product. This flexibility has a downside, as ROI calculations can easily be manipulated to suit the user's purposes, and the result can be expressed in many different ways. When using this metric, make sure you understand what inputs are being used. Thank you for allowing me to help you with your real estate needs. Let me know if I can help you in any way! It is my Goal to Increase the Success and Profitability of Those I Serve Thank you again, Give me a call today and I will help you find the perfect place for you. Joan Wilson (Realtor, SRES, Ecobroker, Certified REO and Short Sale/HAFA Specialist) California Cool 4 Sale Sotheby"s Direct Phone: 760-757-3468 Fax: 760-946-7894 License # 01341483

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