Rule of thumb on ROE?

[Ken Primrose]

What is considered a good goal for return on equity in a property? I’m trying to construct a window when I should start messing with a property to move the ROE back up once it’s accumulated “too much” equity. For reference, I’m in the growth phase of real estate investing so maximizing my returns is a clear goal. I realize down the road letting if I am trying to simply pay mortgages off the ROE  is no longer a useful gauge. 

Wondering if anyone had some windows/rules of thumbs they use they would be willing to share. 

Thanks!

[Ashish Acharya]

A common rule of thumb for Return on Equity (ROE) in real estate is to aim for 8-12% or higher. When ROE falls below this range, it might be a sign that your property has accumulated too much equity, and you could consider options like cash-out refinancing, selling, or 1031 exchanges to redeploy that equity into higher-yielding investments.

During the growth phase, focus on maximizing returns by keeping your ROE within or above this range. Regularly review your property's performance, and if the ROE dips, explore ways to extract and reinvest the equity to maintain your investment momentum. 

Don't forget the tax savings in your ROE.

*This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.