ROI Is Return on Investment
ROI is a way to measure how much money you gain (or lose) compared to how much you spent.
In real estate, ROI answers the question:
For every dollar I put into a property, how many dollars will I get back?
Formula
ROI = Net Profit/Total Investment
Net Profit = Sales Price after Upgrades Minus Purchase Price Minus Costs to Upgrade
Total Investment = Purchase Price Plus Renovation/Upgrade Costs Plus Closing Costs
Example:
Purchase a home for $850,000
Upgrade costs: $40,000
Sell house: $1,000,000
Net profit: $110,000
ROI: $110,000/$1,000,000 = 11.0%
ROI in Everyday Homeownership
ROI isn’t just for investors and flippers. Homeowners should take ROI into account when buying or selling their properties. It can help them decide whether or not home improvements or purchase decisions are financially prudent.
- ROI from Upgrades: Certain improvements; paint, color of the front door, kitchens,, bathrooms, landscaping add more value at resale than they cost
- ROI from Location: Buying in a high demand school district or growing neighborhood can add thousands in appreciation over time.
- ROI from Timing: Buying early in a new construction neighborhood often means built-in appreciation as the neighborhood is developed.
Not All ROI Is Equal
- High ROI: Paint, landscaping, kitchens, baths, flooring (often 70 – 100% +return)
- Moderate ROI: Finished basements, mid-range remodels (50 – 70% return)
- Low ROI: Pools, upgrades that don’t match the rest of the home or neighborhood (often less than 50%)
Do You Want to Maximize the ROI of Your Home?
- Sellers: Learn which improvements will put more money into your pocket – and which ones to skip
- Buyers: Understand which neighborhoods and homes not only fit your lifestyle, but can also grow your wealth
- Investors: We will provide an analysis of costs, cash flow , and appreciation potential to maximize long-term RIO.
ROI isn’t just about money — it’s about making strategic real estate decisions that build wealth over time.
