What is a good real estate investment payback period?
If you’re a Real Estate investor, or considering becoming one, then one of the methods used to calculate the rate of return on your investment is the real estate investment payback period.
But what exactly is the real estate investment payback period, how is it calculated, and what is considered a desirable payback period for investing in real estate?
A real estate investment payback period is the number of years it will take for an investment to pay back the amount of money that was put into it. This includes both the initial invested capital as well as the costs for running and maintaining the investment property.
What’s a Good Real Estate Investment Payback Period?
Since the investment payback period is the metric that is used to determine the number of years before the investment can become actually profitable, it comes as no surprise that most real estate investors and business owners use it as a determining factor of whether or not an investment is worth their time and money.
Similar to other ROI metrics such as the cap rate and the cash on cash return, the investment payback period can vary from one market to another, and the desirable rate can vary from one investor to another.
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