CalculateRealEstateROI

Wealth Building

How does compounding work in real estate?

Cash flow reinvested + appreciation + principal paydown + refi proceeds redeployed.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Direct answer

Cash flow reinvested + appreciation + principal paydown + refi proceeds redeployed.

Expanded explanation

Four compounding engines stack: rent grows ~3%/yr, prices grow ~3%/yr, principal paydown adds ~1%/yr, refi cash recycles into new deals. Compounded effect: 12–18% IRR on quality holds.

Examples

  • $100k → $250k over 7 years = 14% IRR via multiple compounding engines.

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