Our Real Estate Return on Equity Calculator allows you to quickly assess the profitability of your property investment. By entering the purchase price, rental income, additional costs, and financing details, you can obtain precise results.

Choose whether to include transaction costs, and calculate the return on your invested equity.

## Explanation of Input Fields

**Purchase Price (USD):**Enter the total purchase price of the property that you have paid or plan to pay.**Annual Net Rent (USD):**Input the expected annual rental income from leasing the property.**Non-recoverable Costs per Year (USD):**Enter the yearly expenses that cannot be passed on to the tenant, including maintenance costs.**Equity Investment (USD):**Enter the amount of equity you are investing in the property.**Loan Interest Rate (%):**Enter the interest rate on the loan used to finance the property. We calculate the loan amount as the purchase price minus the equity investment.**Transaction Costs:**Choose whether and to what extent transaction costs (such as notary fees, property transfer tax) should be included in the calculation.

## Formula for Calculating Return on Equity

The **Return on Equity** is calculated as the ratio of annual net income to the invested equity, adjusted for any transaction costs.

**The formula is as follows:**

This formula considers the annual rental income, minus non-recoverable costs and loan interest costs. The result is then divided by the total equity invested, including any transaction costs, and expressed as a percentage.

This calculation gives you a precise estimate of the profitability of your investment based on the capital you’ve invested.

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