In real estate, what does "ROI" stand for?

ROI stands for "Return on Investment." It is a key financial metric used in various industries, including real estate, to evaluate the profitability and efficiency of an investment. ROI is calculated by taking the net profit from the investment, dividing it by the cost of the investment, and then multiplying by 100 to express it as a percentage. This percentage helps investors understand how well their money is working for them and allows for comparisons between different investments or projects.

In real estate, analyzing ROI can guide investors on whether to purchase, hold, or sell a property by indicating how much profit they are making in relation to their investment. This metric effectively summarizes the potential returns from rental income, property appreciation, or any other value-added measures, allowing investors to make informed decisions.