ROE - Return On Equity Vs. Return On Effort

[Bryan Hancock]

How much of an average flipper's or developer's ROE is really return on EFFORT for the E component? I consistently see returns cited for ROE, cash on cash, ROI, etc. and it is seldom true that anyone calculates their time in these scenarios.

What is your sense for how much of this supposed ROE is really a return on equity and how much is a return on effort?

[Eric Knapp]

Bryan,

I would not call myself an average investor, at this time, but the two properties I now hold required a large effort on my part, with low cash outlay. I started out with almost no cash, but good credit, and good rehab skills, coupled with the fact that I really like rehab work - like a hobby that could be expensive but isn't because I make my money back. Anyway, I have rehabbed two houses, one SFH, one duplex. I used some cash and some HELOC to buy very distressed properties and completely renovate them, then mortgage them after the fact.
Now, I have found that I want to do more properties, and as I have a day-job, I can't do everything myself very quickly, so I have been establishing relationships with contractors, trying them out on small things, hoping to begin to farm out alot of the work in the future, changing my equation to eliminate alot of my time and effort, just doing the things I like most.