ROI stands for Return on Investment.
It’s a metric used to evaluate the profitability or efficiency of an investment.
In simpler terms, it tells you how much money you’re getting back compared to how much you put in.
- Measurement: ROI is expressed as a percentage.
- Formula: ROI is typically calculated by dividing the net profit (gain minus cost) by the initial cost of the investment, then multiplying by 100.
For example, if you invest $10,000 and get a profit of $9,000, your ROI would be (9.000 / 10.000) * 100 = 90%. - Interpretation: A positive ROI indicates a profitable investment, while a negative ROI means you lost money.
A higher ROI is generally better.
ROI is a valuable tool for investors in real estate or any other field.
It helps you compare different investment options and make informed decisions about where to allocate your resources.