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Key Differences Between Return On Investment (ROI) and Property Appreciation

  Visit Our Website  When evaluating real estate investments, two crucial metrics come into play: ROI (Return on Investment) and Property Appreciation. They may be telling us about the profitability of real estate but they differ in various ways. Here are 7 key differences between ROI and property appreciation, along with examples for clarity: 1. Definition - ROI (Return on Investment) refers to the overall gain or loss made on an investment relative to its cost, expressed as a percentage. It considers both rental income and capital gains (property value increase). For example, you purchase a rental property for $200,000, receive $10,000 in annual rent, and sell it two years later for $250,000. Your ROI is calculated based on a total rental income of $20,000 and property appreciation of $50,000.  -Property Appreciation refers to the increase in the value of real estate property over time, typically driven by market trends, demand, and property improvements. For example, i...