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ROI or return on investment

Posted by Michel B. on 02/05/2023

Welcome to the IBIZA ROYAL AGENCY blog. In this article, we will discuss how to correctly calculate the return on a real estate investment.

I am Michele Bullo, partner and founder of our real estate agency on the island of Ibiza, and I hope that this information will be useful to you in your next real estate investment.

ROI or return on investment

ROI, also known as Return on Investment, is a key measure of profitability for any investor or entrepreneur. This indicator shows the relationship between the amount invested and the profit obtained on that investment.

How to calculate the return on a real estate investment

To calculate the ROI of a real estate investment, we must identify the total income, subtract the costs incurred, and divide the result by the total expenses. It is important to take into account that the calculation varies depending on whether the investment is in real estate purchase-sale or rental.

How to calculate profitability in real estate buying and selling

To calculate the profitability in the purchase and sale of real estate, we must subtract the total costs of buying the property from the sale price and divide the result by the total expenses. The result is multiplied by one hundred to obtain the percentage of profitability.

For example, if we have purchased a home for 100,000 euros and we have had to add 50,000 euros in taxes, registration and reforms, and later we have sold it for 200,000 euros, the profitability calculation would be:

((200,000 – 150,000) / 150,000) * 100 = 33.33% return.


Calculating the return on a real estate investment is crucial before carrying out any financial operation. We always recommend doing extensive research and getting the advice of professionals to ensure a solid and profitable investment. We hope this article has been useful and please do not hesitate to contact us if you have any questions or need help with your next real estate investment on the beautiful island of Ibiza.

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