Why Comparing ROE Between Your Rental Properties Is Essential

Jun 30

Make smarter decisions by tracking your true return

If you’re a real estate investor—even with just a couple of properties—you're probably tracking things like rent, expenses, and cash flow. But if you're not comparing Return on Equity (ROE) between your properties, you're missing one of the most powerful metrics for evaluating performance.

Whether you own 1 or 10 doors, ROE can tell you where your money is working hardest—and where it’s falling asleep.

💡 What Is ROE in Real Estate?

Return on Equity (ROE) measures how much return you’re making on the equity you’ve built in a property. It’s calculated as:

Annual Net Income ÷ Total Equity = ROE

This metric shows how efficiently you're using your capital—not just your cash flow.

📊 Why ROE Matters More Over Time

When you buy a property, you typically track:

Cash-on-Cash Return
Cap Rate
Monthly Cash Flow

But as you pay down your mortgage and the property appreciates, your equity increases—and your ROE often drops unless rents are rising fast.

This means:

A property that once had a 12% ROE might now only generate 4%
You may be sitting on untapped capital that could earn more elsewhere
You won’t see it unless you’re comparing ROE across your portfolio

📉 Low ROE Could Be a Red Flag

Let’s say you have two properties:

Property A:

Annual Net Income: $6,000

Equity: $150,000

ROE: 4.0%

Property B:

Annual Net Income: $5,000

Equity: $60,000

ROE: 8.3%

Even though Property A earns more in raw dollars, Property B is working twice as hard for your money.

That insight could lead you to:

Refinance Property A to access equity and boost ROI
Sell Property A and reinvest into higher-performing deals
Focus improvements on Property B for better returns

🧭 Comparing ROE Helps You…

✅ Spot underperforming properties
✅ Decide when to refinance, sell, or reinvest
✅ Optimize your entire portfolio—not just one door at a time
✅ Track your growth as a real estate business owner, not just a landlord

📥 Want to Compare ROE Easily?

Our Portfolio Returns Calculator (included in the Real Estate Investor’s Ultimate Management Kit) makes it easy to:

Track equity across properties
Compare ROE side-by-side
Make data-driven decisions with confidence

📊 No more spreadsheets from scratch. Just smart, beginner-friendly tools.

Amanda Westland