An Annual Return is defined as the amount of return that an individual has made from an investment. The estimated amount is based on how much of an investor has received over the course of a year. The initial amount of money that was used as an investment must be compared to the annual return rate. In real estate the Annual Return is determined by examining the returns from a real estate property investment. It is important to consider whether the property will be rented out when determining an Annual Return. Owning a rental property can bring in steady income each month. However, even if the property will not be rented out, homeowners can still get returns from refinancing their house. Since refinancing is tax-free there are no hidden costs to do this. Capital gains must also be considered when measuring the initial amount invested versus the amount of returns received. Depreciation is a deduction that homeowners should also look at when analyzing Annual Returns. This deduction is applied to income taxes in case homeowners need to make repairs on their property. The Average Annual return can be determined by looking at the figures over a specified amount of time, such as five years. This will allow buyers to determine the amount of return that he has consistently gotten each year and allow him to spot up and down trends.