Return on Equity Calculator

The Hidden Problem: Dead Equity

Many long-term rental property owners unknowingly hold large amounts of "dead equity" — equity that generates lower returns than it could if redeployed. A landlord who bought in 2015 for $250,000 with $50,000 down might now have $300,000+ in equity, earning only $8,000-$10,000 in annual cash flow. That's a 2.5-3% ROE — well below what a diversified portfolio or additional rental properties could generate.

The solution isn't always to sell. Cash-out refinancing allows investors to extract equity while retaining the asset. A 1031 exchange preserves tax deferrment while moving into higher-yielding properties. The right answer depends on your tax situation, local market outlook, and what alternative returns are realistically available to you. This calculator helps you frame that decision quantitatively.