ROI doesn’t include equity ?

[Peter Bui]

Hey everyone, I was working on my spreadsheet and I was looking at ROI, and I wanted to understand it fully. So I understand that ROI is your profit (income-mortgage-expenses) divides by total initial investment (maybe down payment+closing costs). So let’s say I’m renting it out and building equity, how how does equity come into play. Once the house is paid off does that mean I get a 108% ROI (if my original ROI is 8%?) Thanks in advance! Peter

[Storm S.]

No you would not have 108% ROI you would have a 100% return of capital and the. Whatever money made over that would be your return on investment.