The Return on Equity Quadrant™ is the amount, in dollars, of each of the four primary returns in a real estate investment divided by the current equity in the property.
The four primary areas of return are:
- Cash Flow
- Cash Flow from Depreciation
- Debt Paydown
We typically display this graphically as:
If we divide the amount of the return in dollars by the initial investment (instead of the total equity) for each quadrant, we get the Return on Investment Quadrant™.
You can see the Return on Equity Quadrant™ on The World's Greatest Real Estate Deal Analysis Spreadsheet™ along with the Return on Investment Quadrant™.
I discuss the Return on Investment Quadrant™ and Return on Equity Quadrant™ in detail in the book How to Achieve Financial Independence and Live Your Passion Regardless of Age or Income as well as several classes I've taught.