Evaluate your real estate deal performance over time using our professional BiggerPockets Annualized Return Calculator. Compare properties accurately regardless of the holding period.
BiggerPockets Calculator
BiggerPockets Calculator Formula
Formula Source: Investopedia – Annualized Return | BiggerPockets ROI Guide
Variables:
- Initial Investment: The total amount of capital deployed at the start of the project.
- Ending Value: The final sale price plus any accumulated dividends or cash flow.
- Holding Period: The total duration of the investment in years.
What is BiggerPockets Calculator?
The BiggerPockets calculator (specifically the Annualized Return module) is a vital tool for real estate investors. It allows you to normalize returns across different time horizons. A 50% total return over 10 years is vastly different from a 50% return over 2 years; this tool helps you see the “Geometric Mean” or CAGR.
By using an annualized metric, you can compare a fix-and-flip (short term) with a multi-family buy-and-hold (long term) on an apples-to-apples basis to determine which strategy yields higher efficiency for your capital.
How to Calculate BiggerPockets Calculator (Example)
- Assume an initial investment of $100,000.
- After 3 years, the property is sold for $133,100.
- Divide Ending Value by Initial Value: $133,100 / $100,000 = 1.331.
- Raise the result to the power of (1/3): 1.331^(0.333) = 1.10.
- Subtract 1 to get the decimal: 0.10, or 10% Annualized Return.
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Frequently Asked Questions (FAQ)
Is annualized return the same as ROI? No. ROI measures total gain, while annualized return measures the speed of growth per year.
Can this calculator handle negative values? If the Ending Value is lower than the Beginning Value, the result will show a negative annualized return (loss).
What is a good annualized return? In real estate, many investors target between 8% to 15% depending on the risk profile of the asset.
Why use 18% as the base font? Better readability for financial data on both mobile and desktop screens.