What is a KPI?

A KPI, or key performance indicator, is a metric used to measure and track the performance of a company, individual, or team. KPIs can be financial or non-financial and can be specific to a particular area of business operations. Examples of KPIs include sales volume, customer satisfaction, production efficiency, and employee turnover.

Top 10 Metrics Every Real Estate Investor Should Know

As a real estate investor, you should track 10 key performance indicators (KPIs) to gauge your progress and success. By monitoring these KPIs, you’ll be able to make informed decisions about where to allocate your resources and how to improve your investment strategy.

1. Cash on cash return: This KPI measures the cash flow from your rental property after accounting for all expenses. To calculate it, simply divide your net operating income by the total amount of cash invested in the property.
2. Cap rate: The capitalization rate, or cap rate, is a measure of the expected return on an investment property. To calculate it, divide the property’s annual net operating income by its purchase price.
3. Internal rate of return: The internal rate of return (IRR) is a measure of the profitability of an investment. To calculate it, divide the property’s expected cash flow for a given year by its initial investment.
4. Debt service coverage ratio: This KPI measures your ability to make mortgage payments on an investment property. To calculate it, divide the property’s net operating income by its annual debt service (i.e., mortgage payments).
5. Loan-to-value ratio: The loan-to-value (LTV) ratio is a measure of the amount of debt financing you have on an investment property. To calculate it, divide the property’s outstanding loan balance by its appraised value.
6. Maintenance and Repair Costs: This is the amount of money that you have to spend each month on maintaining and repairing your property. It is important to keep track of this number because it will give you an idea of how much money you are spending on keeping your property in good condition and how much profit you are making from your rentals.
7. Net rental yield: The net rental yield is a measure of the return on an investment property after accounting for expenses. To calculate it, divide the property’s annual net operating income by its purchase price.
8. Cash flow: This is the difference between the amount of money you bring in each month from rent and the amount you have to pay out for expenses like mortgage, taxes, insurance, and repairs. Positive cash flow means you have more money coming in than going out; negative cash flow means the opposite. To calculate it, simply subtract the property’s total expenses from its total revenue.
9. Occupancy rate: The occupancy rate is a measure of how often your rental property is occupied by tenants. To calculate it, divide the number of days your property is rented out by the total number of days in a year.
10. Expense ratio: The expense ratio is a measure of how much you’re spending on operating expenses for your rental property. To calculate it, divide the property’s total expenses by its gross income.

Top 10 Metrics Every Real Estate Reseller Should Know

A real estate reseller is someone who buys and sells properties. A good real estate reseller should have a solid understanding of the 10 key performance indicators (KPIs) that are important to their business.

1. Revenue: This is the most important KPI for any business, and real estate reselling is no different. The revenue generated from each sale is what determines whether or not a reseller is successful.
2. Closing ratio: This KPI measures the percentage of leads that are converted into sales. A high closing ratio is essential for any real estate reseller who wants to be successful.
3. Average sale price: This KPI measures the average price of all properties sold by a reseller. A higher average sale price indicates that a reseller can sell properties for more money, which can lead to increased profits.
4. Average days on market: This KPI measures the average number of days it takes for a property to sell once it is listed. Shorter average days on market indicate that properties are selling quickly, which is good for business.
5. Sales volume: This KPI measures the total number of properties sold by a reseller over a specific period. A higher sales volume indicates that a reseller is selling more properties, which can lead to increased profits.
6. Cost per lead: This KPI measures the cost of acquiring each new lead. A lower cost per lead indicates that a reseller is more efficient at generating leads, which can lead to increased profits.
7. Advertising expenses: This KPI measures the amount of money spent on advertising and marketing. A lower advertising expense indicates that a reseller is more efficient at generating leads, which can lead to increased profits.
8. Administrative expenses: This KPI measures the amount of money spent on administrative tasks such as payroll, taxes, and office supplies. A lower administrative expense indicates that a reseller is more efficient at running their business, which can lead to increased profits.
9. Interest expense: This KPI measures the amount of money paid in interest on loans used to finance properties. A lower interest expense indicates that a reseller is more efficient at managing their finances, which can lead to increased profits.
10. Profit margin: This KPI measures the profit percentage of each sale. A higher profit margin indicates that a reseller is more efficient at selling properties and generating profits.

How to Easily Keep Track of KPIs as a Real Estate Investor

As a real estate investor, it’s important to keep track of your key performance indicators (KPIs). Fortunately, there are a few easy ways to do this.

One way is to create a spreadsheet with all of your KPIs listed in columns. Then, you can update the spreadsheet with your latest data every month or quarter. This will allow you to see at a glance how you’re performing in each area and make any necessary changes to your business strategy.

Another way to track your KPIs is to use a software program specifically designed for this purpose. There are many different programs available, so be sure to find one that meets your specific needs. This method can be especially helpful if you have multiple properties and need to track KPIs for each one.

No matter which method you choose, tracking your KPIs is essential to the success of your real estate investing business. By doing so, you’ll be able to identify areas that need improvement and make the necessary changes to keep your business on track.