Hi All,Been doing some research on BRRRs and I am wondering what the ROE is of the property after you take out all your cash.

What should your ROE be?

The ROI is high (I put in $40,000 down payment for the initial acquisition), however, the ROE (Return on Equity) is low  assuming I have about $265,000 equity built and yearly gains returns of 4.52% ($12,000 gain after all expenses).

Is 5% ROE okay or should I be aiming for more?

@Edgar Garnys, as you've calculated it, ROE is highly dependent on appreciation, which is speculative.I think ROE is a better "place in time" metric.

The ROE is sitting at around 11% on both properties and by mid 2024, I expect ROE to drop more (increasing rents again now in January).

Paying off the mortgage quickly also really hurts your ROI and your ROE. 

I don't think having an independent appraisal would be cause to overturn the bank's appraisal if it came back low, and you'd probably want to ensure that the one you hired had the comps you were looking at anyhow.    

(Although I’d argue ROE is a better measure.) heck after 4-5 years you’ll probably take all your cash out anyway. 

BP Community -Will you all help me double check my math and my assumptions on my current annual ROE?