This Is Not Your Real
Return on Equity
Most investors calculate return on equity using simple equity — property value minus loan balance. But that number ignores selling costs, capital gains tax, and depreciation recapture. Your real equity is lower than you think.
The Calculation Most Investors Use
Simple, intuitive — and dangerously misleading.
This is the number most investors use. It's not what you'd actually receive.
What Simple Equity Ignores
Four costs that stand between your equity and your bank account.
Your True Net Equity™
This is what you'd actually walk away with if you sold today.
True Net Equity™ is only 63% of Simple Equity. The other 37% — $52,400 — goes to agent commissions, closing costs, depreciation recapture tax, and capital gains tax. You never see it.
Simple ROE vs. Return on True Net Equity™
Using the wrong denominator makes your returns look better than they are.
| Return Stream | Annual Return | Simple ROE | ROTNE™ |
|---|---|---|---|
| Cash Flow | $2,400/yr | 1.71% | 2.74% |
| Appreciation | $12,600/yr | 9.00% | 14.38% |
| Loan Paydown | $4,800/yr | 3.43% | 5.48% |
| Tax Benefits | $2,100/yr | 1.50% | 2.40% |
| Total Return | $21,900/yr | 15.64% | 25.00% |
Sample data — $420K property held 7 years, $280K loan balance, $2,800/mo gross rent. Your results will vary.
Why This Matters for Your Decision
The gap between simple equity and True Net Equity™ changes every calculation downstream.
Accurate Sell Decision
If you think you have $140K in equity but only $87.6K is real, you might sell expecting proceeds you'll never see.
Fair Comparison
Comparing your current property's ROE against a new investment only works if both use the same denominator — True Net Equity™.
1031 Reality
A 1031 exchange avoids the tax hit — but the selling costs remain. True Net Equity™ is different in each scenario.
Explore More Features
See everything Should I Sell My Rental Property? has to offer.
5-Step Sell-or-Hold Wizard
A guided wizard that walks you through property selection, replacement planning, assumptions, equity reality check, and full scenario comparison.
Learn more →3-Scenario Comparison Engine
Compare Keep, Traditional Sale, and 1031 Exchange with sale proceeds breakdowns, surplus/shortage alerts, and cumulative return charts.
Learn more →Return Quadrant™ Analysis
See all four return streams for each scenario — appreciation, cash flow, loan paydown, and tax benefits — classified by Cash Now vs. Cash Later.
Learn more →Cash Now vs. Cash Later
See how much of your return is spendable today vs. building wealth over time — and how that balance shifts when you sell or exchange.
Learn more →More Certain vs. More Speculative
Know how much of your return is locked in by contracts and tax code — and how much depends on the market cooperating.
Learn more →Future Tax Liability Tracker
Track how tax liability shifts across scenarios — latent when you keep, eliminated when you sell, and deferred in a 1031 exchange.
Learn more →Included with All Apps
These features come with every app — no extra cost.
Property Database
70+ fields, auto-save editing, live calculation sidebar, smart search and filtering.
Learn more →Comprehensive Property Data
Every number an investor needs across 11 organized sections with smart field types.
Learn more →Smart Editing & Live Sidebar
Auto-save with 800ms debounce, per-section status badges, and real-time calculations.
Learn more →Property Classification
Tag properties by investment strategy and property type. Filter and sort your entire portfolio.
Learn more →Real-Time Calculations
27 key metrics across 5 categories computed instantly as you type, with clickable walkthroughs.
Learn more →Portfolio Dashboard
Portfolio highlights, property cards, strategy and type breakdowns, overview charts, and cross-app features.
Learn more →AI Property Import
Copy a prompt, paste your MLS listing into any AI tool, and import 20+ property fields in seconds.
Learn more →This Is Not Your Real Return on Equity
Every time you calculate ROE using simple equity, you're using a number that's 37% too high. Should I Sell My Rental? fixes this automatically.
See Your Real Return on Equity
Stop using inflated numbers. Get the True Net Equity™ for every property in your portfolio.
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