Joan buys a house for $250,000,rents it for two years for $1,000 per month,and sells it at the end of those two years for $300,000.Joan's per-year rate of return is:

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Joan's total income from rent is $24,000 ($1,000 x 24 months). The total gain from selling the house is $50,000 ($300,000 - $250,000). The total gain over two years is $74,000. The per-year rate of return is ($74,000 / $250,000) / 2 = 14.8 percent.

Joan Buys a House for $250,000,rents It for Two Years