Name the denominator
Cash-on-cash: annual pre-tax cash flow ÷ cash invested. Unlevered ROI might use total property gain ÷ purchase price. Mixing them makes two deals incomparable.
What to include
Include closing costs on buy and sell, renovation outlays, and selling expenses in serious ROI math. Compare timelines: five-year ROI differs from thirty-year hold IRR.
Cross-check with liquid markets
Mistakes
- Counting appreciation assumptions as certain.
- Ignoring hours spent as “free.”
Use the calculator
FAQ
- Is mortgage paydown ROI?
It builds equity but is illiquid until refinance or sale. Count it explicitly if you include it.