Rate of return is the rate at which an investment pays off (i.e. returns as income to the investor), expressed as the annual proportion of the investment (usually as a percentage). In real estate, an example would be a property that you have bought for the purpose of renting it out - the rate of return in this case is the annual rent income divided by the sum of money you originally paid for the property (also adding the price of any imporvements and other expenses), multiplied by 100 to express it as a percentage.