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Understanding Real Estate Metrics In 2014

Written by Than Merrill

Real estate metrics hold the key to success for real estate investors who have big New Year’s resolutions. Those intent on succeeding in the New Year must recognize the importance of this concept. Familiarize yourself with the real estate metrics that matter most. However, perhaps even more importantly, know how to improve them. Understanding real estate metrics in 2014 has the potential to propel your business to the forefront of the investing industry.

While it may appear that real estate moguls and business leaders achieve overnight success on a regular basis, it’s rarely the case. What the public is made aware of is typically just the tip of the iceberg. More frequently, these apparent overnight successes are directly attributed to many years of trial and error. The same may be said about serial entrepreneurs like Richard Branson and real estate figure heads like Donald “Why doesn’t he show his birth certificate” Trump.

It may seem like natural born talent or the result of an unparalleled genius, but that is rarely the case. Success on this level is normally the result of learned and modified behavior based on metrics. In the past, metrics were relatively rudimentary. However, thanks to technology, it’s far easier to effectively measure metrics and fast track to success. It’s been done again and again in every industry. Metrics have the ability to provide a solid foundation for any business if they are accounted for correctly.

25 Notable Real Estate Metrics:

  1. Number of purchase offers being made
  2. Number of unique website visitors
  3. Time spent on page by real estate website visitors
  4. Number of unique page views
  5. How many new contacts are made each day
  6. Number of real estate closings per month
  7. Number of phone calls made daily
  8. Hours spent on lead generation
  9. Cost per action
  10. Cost per lead
  11. Monthly gross income
  12. Capitalization rate
  13. Interest rates
  14. Year over year home price increases
  15. Number of local real estate transactions per year
  16. Cash on cash yields
  17. Annual rental increases
  18. Conversion ratios
  19. Number of Facebook likes
  20. Number of Twitter followers
  21. Google search engine ranking
  22. Time spent focusing on goals each day
  23. Hours dedicated to continuing education each month
  24. Number of real estate marketing channels in your mix
  25. Hours taken to brainstorm and recharge each week

Take note of these specific metrics, as they are the most important for real estate investors.

Real Estate Metrics: Good Vs. Bad

The previously mentioned metrics are all viable to a real estate investor and should be accounted for, but they can also work against real estate investors. Taken out of context or inaccurately, this data can become a major hurdle. More importantly, if used incorrectly, real estate metrics can severely cripple any aspiring business.

While these metrics are easier than ever to track, they can also become a major distraction for investors. The sheer volume of available metrics provides a labyrinth of information that is easy to get lost it.

Improving the wrong metrics can be incredibly counterproductive. For example; a call center may notice that their top performers are clocking at least 200 calls a day. However, insisting that all call agents make 200 calls a day and ignoring their actual sales is an obvious blunder. This rationality is comparable to chasing abnormally high website visitor numbers without high conversion rates. It can mean little to an investor who makes money from closed real estate deals. In other words, the metrics you focus on should be relevant to your particular needs. Don’t waste time on the wrong data.

Identifying those metrics associated with proven success is a great theory, but you must retain focus on the ultimate goal. For most real estate companies it is not deal volume or gross revenues, but net income after taxes.

Keep focused on this number and work backwards, but don’t lose site of the main objective.