CalculateRealEstateROI

Methodology

Risk-Adjusted Return Methodology

The Risk-Adjusted Return Engine adapts Sharpe-style logic to residential real estate: returns are scored relative to deal-level risk (volatility, vacancy, leverage).

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

Return index

ROI and cap rate are blended (7× and 5× respectively) and capped at 100.

Risk index

Market volatility, vacancy rate, and LTV above 70% each contribute to a risk index capped at 100.

Final score

Risk-Adjusted Score = clamp(return_index − 0.55 × risk_index + 30). Opportunity grades range A+ (85+) to D (<42).