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440: Why ROE Beats ROI, and How to Earn Truly “Passive” Income from Real Estate

BiggerPockets Money Podcast

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The Importance of Opportunity Cost

A lot of people I think when you're looking at a property, we'll say I've got $400,000 in that property now. So have you ever gone back and done the math about how much you paid down for the mortgage? And you're talking about opportunity cost here. You paid down your property instead of investing it in something else. Here's a great example of how that might happen: A $400,00 property in Denver makes $2,000, $2,500 in rent. On an annualized basis or on a go forward basis, what are you going to earn now? How can you expand that going forward?

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