ROI Calculator
Calculate the return on investment for any business decision or financial opportunity.
What This Calculator Does
This ROI calculator measures the total and annualized return on investment for real estate or any financial investment, accounting for capital gains, rental income, and expenses over a specified holding period.
The Formula
Total ROI measures the overall percentage return. Annualized ROI adjusts for the holding period so you can compare investments held for different lengths of time on an equal basis.
Step-by-Step Example
Enter investment cost
The total amount invested, including purchase price and any improvements. Example: $250,000.
Enter current/sale value
What the investment is currently worth or was sold for. Example: $320,000.
Add income and expenses
Annual rental income ($18,000) and annual expenses ($5,000) over a 5-year holding period.
Review ROI
Capital gain: $70,000. Net income: $65,000. Total ROI: 54%. Annualized: 9.0%.
Real-World Use Cases
Investment Performance
Evaluate how well a past investment performed compared to alternatives.
Property Disposition Analysis
Determine if its time to sell a property based on its ROI trajectory.
Investment Comparison
Compare annualized ROI across different investment types and holding periods.
Common Mistakes to Avoid
Not including all costs (closing costs, renovation, maintenance) in the total investment figure.
Comparing total ROI of investments with different holding periods. Use annualized ROI instead.
Ignoring the time value of money - a 20% return in 1 year is much better than 20% over 10 years.
Frequently Asked Questions
Accuracy and Disclaimer
ROI calculations are historical or projected and do not guarantee future results. Tax implications, transaction costs, and opportunity costs are not fully captured. Consult a financial advisor.
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