Return on Equity (ROE) in Real Estate

Return on equity is one of the financial measures used as well on other types of investments. In Real Estate analysis the return on equity means a ratio between cash flow after taxes (CFAT) and the initial investment. ROE is calculated for the first year typically and is expressed as a percentage. It is advisable to calculate this measurement for other years as well, and in case of its increasing decline over the time, resale of the property can be evaluated.

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