Debt Pay Down Return on Equity

Annual principal paydown as a percentage of current equity.

Example Result

Sample Data

4.06%

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

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Debt Pay Down Return on Equity Formula

Annual Principal Paydown / Current Equity x 100

Annual $3,129 / $77,000 x 100

4.06%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a debt pay down return on equity of 4.06%. Principal paydown is the return most investors overlook. While cash flow might be modest, your tenant is paying down your loan every month — increasing your equity automatically. Tracking this as an ROE metric shows how much of your equity growth comes from debt reduction versus appreciation or cash flow.

Where This Value Comes From

Debt Pay Down Return on Equity is not entered directly — it is calculated from Year 1 Principal Paydown and Total Equity Current. See the formula breakdown above and the detailed inputs below.

Calculated From

Debt Pay Down Return on Equity is calculated using these inputs:

Year 1 Principal Paydown

Total principal paid down during the first year.

$3,129

Total Equity Current

Current equity position (property value minus loan balance).

$77,000

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Why It Matters

Principal paydown is the return most investors overlook. While cash flow might be modest, your tenant is paying down your loan every month — increasing your equity automatically. Tracking this as an ROE metric shows how much of your equity growth comes from debt reduction versus appreciation or cash flow.

Detailed Explanation

Debt Pay Down Return on Equity measures the equity gain from your tenant effectively paying down your mortgage principal, expressed as a percentage of your current equity. This is the silent wealth builder — your tenant is increasing your net worth with every mortgage payment.