Peter Drucker was often quoted saying “You can’t manage what you can’t measure.”
This oversimplification might ignore some of the complexities of relationships in business, but it is very telling. Being able to measure what matters is important to business.
A KPI is a Key Performance Indicator. That means it is a metric that can give you an insight into how your business is performing.
One of the important aspects of using KPI’s is knowing when to focus on improving and monitoring what KPI. Since it will take effort to get accurate data and calculate some of these KPI’s, it is important to focus on KPI’s that are actionable.
These overall KPI’s shed light into the whole real estate investment business. They are also important to understand since they are very relevant for bankers considering issuing a loan.
Cashflow is one of the most important KPI’s in any business. It can literally mean the difference between success and failure of your investments. The definition of cashflow is the income left after expenses.