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Investing in real estate can be an incredibly lucrative endeavor, and can provide a steady long-term income. Before you jump in, however, it’s important to understand how to calculate your return on investment (ROI). This requires an understanding of the various factors involved in real estate investment, such as rental income, compound interest, dividend-paying stocks, and real estate investment trusts (REITs). Credit card companies and other lenders also use compound interest to calculate your debt.
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Investing in dividend-paying stocks offers dozens of advantages. They can be riskier than other investment, but you’ll strengthen your portfolio overall by allocating a portion of your money to stocks. Some stocks, such as those that operate as a real estate investment trust (NASDAQ:REIT) or master limited partnership (MLP), offer even greater returns.
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The result of this calculation is the ROI. Rentals: Owning a rental property can generate steady long-term income. Determining ROI for rentals requires you to factor in the cost of the property, repairs, taxes, and other fees. Then you’ll need to subtract the total from the rental income you’ll receive.