Interesting that you bring this up. Many calculations surrounding returns are based on fancy financial mathematics and university style formulas, but those of us who are in the trenches know that it is critical to separate two entirely different realities.
First there is deployed v. not deployed capital. Serious investors only care about what they get - and for that to be maximized, their funds have to be deployed.
Second, there are passive and active investors. Most money made in traditional investments such as stocks, bonds, commodities, and mutual funds are always passive, so 3% ROI means 3% ROI. Real estate is one of the few investments where the capital is super-charged by the efforts of the investor.
For some players, this can be great, but when evaluating the result, the investor has to remember to remove themselves from the equation to see how much the money returned. 20% returns are easy when one is working in the deal (meaning that the money didn't really return that amount by itself) but there is a very strict limit on how much an investor can make when they are contributing capital.
It is not necessarily better to be active or passive - as long as the investor is aware what the basis is for making the money. Just remember that wealthy people put the money to work because they know that their personal efforts are strictly limited in the amount that can be produced.
