Analyzing Data And Key Performance Indicators In The Real Estate Industry With JD Esajian

When you want to make everything smooth for your business, you have to monitor different aspects of it. In this episode, JD Esajian and Jeff Rutkowski discuss the importance of looking at data and Key Performance Indicators (KPIs) to invest in real estate. What are the most important aspects to look at? What are the stats and data that will provide you with an edge in planning your next step? What about in other different fields in real estate? JD and Jeff answer these questions and more, so stay tuned to this episode!

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Analyzing Data And Key Performance Indicators In The Real Estate Industry With JD Esajian

Welcome to this episode of the show. We’re going to be talking KPIs, Key Performance Indicators. We’re here with our resident expert, Mr. JD Esajian. It’s going to be an incredible episode. When I think of KPIs, I think of you, JD.

I’m honored that you would. They’ve been a powerful driver in our business.

You guys are maybe reading, maybe you have some KPIs going on in your company that you saw. You maybe have no idea what a KPI means or feel indifferent about them in general. I promise you, by the end of the show, you are going to be pretty excited about KPI. That is our word of the week which stands for Key Performance Indicators. JD has a saying around here within FortuneBuilders.

 

If you can’t measure it, you cannot improve it.

Key Performance Indicators are vital metrics that you’re going to track and measure as a real estate investor in various parts of your business. We’re going to be breaking that down in the show. There are four main areas that we’ll get into. There are many more, but four main areas that are vital metrics.

It’s like your heart rate in your body. First off, if you don’t know where to track it, you got a problem. If you track it and the number isn’t solid or strong and not good, you got problems. That’s an analogy that I often use when I’m teaching about KPIs for the first time. As a business owner, every business has KPIs, you got to know where to track them. You got to know what’s good and what’s not good so you can improve or maintain what you’re already doing.

That’s the word of the week, KPI. Let’s get into the show.

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JD, you’re alluding to this a moment ago. Key performance is vital. In your mind, what’s the difference between important and vital?

Important things are things that you get to when you have time. Vital things are, if you don’t do them, you don’t have a business and you’re not buying homes. If we’re talking about real estate, you’re not renovating, selling and not making money.

You got the essence of it. Your life and business depend on it. I like to define the difference this way. I had a birthday. It was important on my birthday that Claudia, my wife got me a present. Come next March, it is vital that I buy her a present. We’re talking serious stuff, folks.

That’s a better definition than I gave.

Key Performance Indicators, if we’re not tracking and measuring areas of our business, we’re flying blind essentially. We don’t know, are we trending in the right direction, things along those lines and not tracking KPIs in our business, but the market as a whole.

That’s where it all starts is knowing what the market’s doing.

I’m involved in a Monday meeting with JD where on a weekly basis, you are reporting market stats, letting us know what is going on here in the San Diego market. Why don’t we kick it off there? What and why should a real estate investor be looking at in their market on a weekly basis?

Most people understand that the real estate market’s been on fire. On fire is an understatement. That isn’t always the case, regardless of what the market’s doing up, down, sideways, backwards. These are the things that are good to look at every week. In your ZIP code, city and county, wherever you’re investing, you want to look at the amount of new listings that come on the market. We look at it every week. Most realtor associations track that and that’s the best place for pulling information, the amount of new listings that come on every week.

You also want to look at the amount of properties that go pending each week. You also want to look at the amount of new solds that happen each week. The other thing you want to look at is the median price point and how that changes week over week. Those are some of the big ones. There are others, but those are the ones that we’re always looking at. You also want to look at the total amount of available inventory in your marketplace, so the number of units. You can track it by detached single-family or you can look at and should look at it, overall, townhomes, condos, attached, detached.

You want to look at those things and track them every week. If you want to get sexy, you can graph it and chart it like we do so that you can see it overtime. Those are the key ones that we’re looking at in our marketplace. There are other ones that we look at like the percentage of list price that is received in the overall county, but we’ll talk about some of those when we get into the individual departments. Once again, the total amount of new listings that come on, properties that are pending, properties that get sold and median price point. We look at this and I would suggest everyone do this every single week.

Also, on every ZIP code, you’re investing in on a county level as well. It’s showing you in real-time what is happening in your market. It’s also giving you an indicator of where you’re trending and where you want to be. I feel like I quote Wayne Gretzky a lot. I wasn’t even a hockey fan. He says, “I never skate to where the puck is. I skate to where the puck is going to be.” That’s what KPIs can do for you. As a real estate investor, you want to develop this ability where you almost could predict a future in a sense.

You’re looking at the current and the past. If you’re looking at the stats that we went over, you’re going to see our pendings continuing to outpace new listings and sales. If that gap is increasing over a period of time, it’s likely to mean that inventory is going to get driven down. If more properties are going into a contract to sell, the new inventory is coming available, there’s going to be a separation there that’s going to drive inventory down.

Alluding to your Wayne Gretzky quote, you got properties that you’re buying and you can project out if the inventory or the availability of properties when you go to market is going to be softening or continuing to be a seller’s market like it has been. If you look at those stats as we do every week, what you are probably going to see is that there isn’t an immediate end in sight to this strong seller’s market. That’s a good thing if you’re selling homes and you’re investing like we talk a lot about on the show. That’s the beauty of KPIs, you nailed it as you can see through your business, like what it’s doing health-wise and you can also project the future.

I’ve been tracking this new ZIP code where I bought a house. I have everything covered that you said. We’re looking at new listings. To give you guys an example, on this particular ZIP code 92029 here in San Diego County, there are 27 new listings for September 2021, 17 pendings and 28 closed. What is that telling you? How are you interpreting that?

You’ve got fewer pendings and you have new listings and sold. We’re selling homes in that ZIP code so I know it’s a strong seller’s market still. What I’d want to see there and to be able to project is the gap between pendings and new listings changing? Is it getting narrower or is it separating? Looking back on what happened in August 2021, that’s going to tell you where things are going. What that’s saying is that Escondido is a strong market.

A median price of $1,075,000, up from $805,000 in January 2021, which is crazy, that’s bonkers. The percent of list price. I believe you mentioned that, but for September 2021, in this particular ZIP code, 101.5%.

It’s super strong.

That means that sellers were getting 1.5% on average more than what they were asking for their home.

Important things are things that you get to when you have time. Vital things are, if you don’t do them, you don’t have a business.

That speaks to demand. There is very low inventory in a lot of markets and people are having to step up to acquire properties, even above what someone’s asking for. When you couple in what interest rates are doing now, your buyer’s buying power has gone up because interest rates are so low. They’re offsetting that paying more than someone wants by understanding that the cost of money is dirt cheap.

Days on the market are 22 days. I want to pause here for a little bit. I think it’s important to understand the current inventory. In this particular ZIP code, 23 homes are available, which equates to a one-month supply. A lot of times, you’ll hear this referred to as an absorption rate. Meaning, if there are no new properties listed in this ZIP code, the current inventory is going to last one month, which is super low. In most ZIP codes across the country, you’re going to find give or take a low number. To give context, a neutral market would be considered about 5 to 6 months of supply?

Depending on what state, NAR or local association, 5 to 6 months would be a buyer and seller neutral market. Anything down around 1 or 2 months’ supply is heavily skewed towards the seller side.

You’re not hitting buyers’ markets numbers until 6 to 7 months of supply. Folks, buy real estate.

With the appreciation that people have been experiencing, which doesn’t always maintain, but that’s what these stats allow you to do is look at when the market’s changing. Seasonally, it changes more in other markets too. In San Diego, we have one season here, so it doesn’t change a whole lot. In other places where you can’t go outside for months because of the temperature or the snow, these stats will adjust during those seasons too.

You’re looking at it weekly, but you also want to be breaking it down monthly and quarterly and then looking at that seasonally as well. A change in the winter months in certain markets is normal. It doesn’t mean that the market is radically changing per se. It’s a natural function of what happens that in that particular part of the country or part of the world because of the weather.

That’s what we consider your vitals. These are just some sub-categories that you could break down. As JD mentioned, you look at it quarterly and yearly as well. If you’re looking to invest or you’re currently investing in a market, those are the metrics that you want to have your finger on the pulse.

It’d be good for people to know how we track and report those at CT Homes. At the very minimum and we do this, you want to have it on a chart or some spreadsheet and you want to be plugging those numbers in every single week. Graphing and charting it is a fancy way and you should do that. That’s what we do at CT Homes every single week when the stats for the San Diego Association of Realtors gets put out. I, as President, go to our spreadsheet and I update those numbers. You got to find out where those numbers are reported in your marketplace.

For us, it’s on Friday here. On Friday, when those numbers get updated, I put them onto the chart. What we do as a team is every Monday in our team meetings. We look at these stats as a whole for the county. We focus on a couple of ZIP codes that we own a lot of property in at that time. That does a lot. It’s a team-building activity. One, it gives everyone market knowledge that’s on the team. It gives the acquisitions team members power and statistics when they’re talking and negotiating. On the sales side, it’s the same thing. Business intelligence is what it is. We look at it every Monday and we look at the previous week and then we see how that’s trended month over month as well.

Those are the things you want to track, folks. Weekly basis minimum. It’s going to give you personally a lot more confidence. You hear a lot of people say, “It’s a great time to buy real estate right now.” or “The market is so hot.” Those are very general subjective statements. When you put all that aside and you get right down to the data because the data doesn’t lie.

You become a better negotiator too. I’ll give you a quick example. I spent a lot of time talking on the back-end to our agents bringing buyers for our properties. Besides being President of CT Homes, I lead the sales team. Various times I’ll have lenders or agents say, “You know how COVID has extended the closing period for lenders.” I know from data that’s not the case. We’re closing most of our properties from when we opened Escrow to selling them in less than 21 days.

 

When a lender or an agent says, “You know how things are taking longer to sell.” I have market data and stats to be able to have a professional conversation with them and squash their comment that it’s going to take longer to close the property. That also shows me that either they’re not as knowledgeable as they can and should be or they’re trying to use that to leverage a longer closing period. That’s one example. It does give you a lot of confidence with your local market, with whoever you’re talking to and who you’re negotiating with.

Those are your market stats and KPIs. JD, let’s chat a little bit about acquisition KPIs. I know from being in your meetings and reporting, there’s a lot of stuff you guys do but what would you say are your top two stats on the acquisition side of the business you’re tracking?

We’re always looking at the amount of offers that we write over a time period. You look at it weekly and monthly, which we do. More importantly than that number, the amount of offers that you write, you want to compare that to the amount of properties that you buy. You ultimately want to know how many offers on average you needed to write to buy a home. That’s a very important statistic to look at because you can use that to create projections and goals for the amount of properties that you want to buy over the next year or the next quarter.

If you have team members like we do, employed by us to buy properties, we can set up commission structures around that KPI. We can give them goals and benchmarks. We can do one-on-one reviews to see where they’re at in the given period. We know on average, how many homes we need to write to buy one home. That’s a very important acquisition KPI that you want to look at.

That’d be a staple for all of us. We’ve said this a few times on the show, but pre-COVID, I think you guys are 1 out of every 24 offers written.

Twenty-six and a half.

One out of 27 and then now 13 points, 8, 9, 6, which is incredible for a very competitive market. If you guys haven’t read the episode where JD and I talked about eight different things that CT Homes is doing to get more offers accepted, I would highly recommend going back and reading to that episode, especially in such a competitive market. You want to give yourself as much advantage as you possibly can.

Another one that it’s very important on the acquisition side that we’ve become very hyper-focused on is the amount of properties that we get under contract or locked up as we say in our office, to compare it to the percentage that we buy them. We lock up a property. We secure it. We have it under contract. We want 100% of the time to buy that home.

That’s the goal with that stat, but that isn’t always the case. There are various things maybe that come up in the disclosures that we see or in additional inspections. If we spent the time to write the offer and analyze the property and get it under contract, I want to buy that home. We look at that on a weekly and monthly basis.

Our goal there is 100%. That’s another important one because it can show you, are missing something on your initial walkthrough? Are you negotiating well enough? For example, sometimes, maybe your financing doesn’t come through. Those are things when you aren’t at 100% that you can focus on and improve so that the next time you write an offer and you have a property on the contract, you can assure yourself that you will buy that home. When you’re not operating optimally on these numbers, these are things that you work on in your business.

I love that particular KPI you alluded to it. It shows you weaknesses in a sense. You could begin to see a trail of improvement, if I’m not at 100%, what is the common thread behind it? Am I missing it on my ARV?

You missed something on the repair estimate.

It directs you to the area maybe need to educate a little bit more or whatever it may be. With that being said, let me talk to the new investor for a moment. Here is I would consider this some higher-level conversation, 80% to 90% of investors out there, this stuff isn’t even on their radar. Maybe you’re reading this and you’re thinking, “How do I even write an offer on a home? What do you mean I can’t get out of a house that I have a contract on?” There are ways to write offers to protect yourself and give yourself contingency, a way out where if you don’t go forward with the deal, you can return your deposit money.

As always every week, I point you guys to this resource, but it fits perfectly now. If you want to learn this education, this is one of the things that our trainers cover on a weekly basis. How to write these offers, how to build into proper contingencies so you can back out of that deal. JD said we want to hopefully try to buy 100% of the offers that we write.

Sometimes you may miss the mark. I did a lot when I was a new investor. I underestimated renovation costs. Get that education. If you’re interested in that we have a free class every week. FortuneBuildersShow.com will get a free ticket to a free class. It’s about a four-hour education. On the acquisition stats or KPIs, we have a number of offers to deal with. We have a percent of the contracts and properties we lock up to buy. Is there anything else you want to throw in there?

If we’re not tracking and measuring areas of our business, we’re flying blind.

There are a lot of other ones, but those are the big ones. Projected profit when you write the offer is important. That number is important when you get to the end of the deal to compare what you projected versus what you made. In our training, we cover more of these. These are things like at the academy, I break down and at the rehab bootcamp and some of our advanced trainings. If you focus on those two that we went over on the acquisition side, you’re going to be ahead of 98% of other investors out there.

We’re going to get to some KPIs here on the sales side. First, let’s stop and talk a little bit about the renovation. You guys, you’re a residential redevelopment company. Out of every ten properties, what percentage are you renovating versus wholesale?

We’ve always heavily relied more on renovating because we love to do that, so 80/20, 85/15, 90/10. We buy properties to renovate them because we love to do that. For example, maybe our inventory load is too great, I don’t know what that number would be because we always have a lot of property or a very tight list of wholesale investors that reach out to us from time to time, “I’m looking for my next property.” We have something that we’re buying or we bought, we’ll move it to them. Most of the time, 80% to 90% we’re renovating homes. We have 41 renovation projects going on in San Diego County.

Every week it seems to go up.

It has been going up because we’ve been focusing on the acquisitions metrics that I went through. On the renovation side, a couple of key ones that you always want to have in front of you are your average dollars of renovation spent per square foot of the property. That’s a very important metric that we use all the time. For example, our acquisitions team will use that metric to do a very accurate job of estimating repairs on a like-type property that they’re looking at.

It’s almost like estimating repairs before they’ve been to the home. We’ve got seventeen plus years of statistical data. We haven’t a broken out and you should do this by type of asset, right condos, townhomes, single-family homes, but then break the single-family homes down by ZIP codes, style of home, age of the home. I can go on and on, but you get the idea. To recap, the renovation dollars spent per square foot is a very important renovation KPI.

We’ve always tracked numbers from our first day in business. When we started to get dialed in and breaking things down on a spreadsheet and dividing it up by department, our business took a tremendous leap in terms of efficiency and profitability. We’re able to do more with less people, which increases profitability and efficiency in general. It was a fundamental shift in our business. It’s one of the reasons we were able to cut the amount of offers in half that we needed to buy one home this year.

You might remember a recent show. We went to that video of a house before we started the renovation when we took everyone through that home. I was there the other day so I did a quick walkthrough of that home during construction. Since we’re talking about renovations, I thought we’d cut to it if you want to show everyone the during of that home and then we’ll come back and talk about the renovation steps.

“We’re back out here.” You might remember I showed you the house when we bought it before it was touched and its original condition. Now, we’re going to get a chance to look at it during the project and believe me when I tell you, it’s come a long way. Outside, not a ton is changing. If you might remember, we’re going to get to the landscaping. It’ll be one of the last things we do. A nice big pergola for your off-street parking, but the real magic is happening inside.

We are full-scale construction. We’re in the process, but I’m going to give you a rundown of the cool changes happening to this house. This entryway or this formal living room in front was very closed off to the back of the house. The layout changes aren’t done yet, but you can already see what opening up this space has done. We removed a partial wall here. We have an engineered beam up in the ceiling and supported so this whole space can be open. We’re going to have a nice open kitchen.

This isn’t going to be the finished height of the wall. You’re not going to need to stand when you use the breakfast bar. I’m shorter than most people. This will get adjusted height-wise. We’ll have a nice bar top. Opening up into the great living space. Before we get there, let’s check out the soon-to-be-finished master retreat.

The one deficiency of the home, in my opinion, was it didn’t have a true master. That’s all changing. We’re tiling here, but this is going to be the master bedroom with a nice big closet and its dedicated bathroom. We’re going to have a nice big walk-in shower. We’re going to have a great, nice, big vanity and your toilet to do your business.

On the other side of the home, we’ve got two bedrooms and a bathroom there as well. We’re going to have 3 bedrooms, 2 baths, but I think the best feature of this home is your open living concept. You get a sense of what that’s going to feel like now with this open. We’re deciding how much of this space we’re going to open up the wall between the kitchen and the living room. If you didn’t catch my earlier video, I said, and we’re going to do that here a nice, big multi-sliding door to get to the backyard and the patio.

You’re going to be able to look through your house when you walk in and take advantage of the indoor-outdoor space. Here at this home and being able to be outside year-round in San Diego. The other great feature of this home is you’ve got a yard Bonanza. Tons of space and amazing. It offers a lot of opportunity for the owner’s delight.

This home is going to be available soon. We’re excited to show you the finished product very soon. I already showed you the house when we bought it. I wanted to give you a real-time update and believe me when I tell you when it’s done, it’s going to blow you away. Be sure and stay tuned for that episode. We’ll see on the next show.

I remember that from a previous episode where we walked through before you got your hands on it. That would be another one to go back and look at it to give you more context. At this point, during renovation, you have a projected dollar per square. I know something else that you guys keep a close eye on is your projected renovation costs versus your actual.

 

From a basic standpoint, as a person that’s renovating homes, if you’re not looking at what you spent versus what you projected, you have no ability to get better. We’re always looking at that at the end of the project and deciding, “Did we hit our mark? Did we spend more because we wanted to? Appreciate the home more or do we spend more because we had to because we missed something?” We’re fine-tuning that so that ultimately we can be as profitable on that deal as we can. We always want to look at when we’re done and all the money spent. We projected 30. We spent 31.

It’s only $1,000 more, but it’s $1,000 more. Why did that happen? Did we miss something on our initial walkthrough? Did we not negotiate a change order well enough? Did we say, you know what, if we spend an extra $1,000 on this sizzle feature, we can sell the home for more and did that happen? If you spend $1,000 extra on the rehab calculated and it gets you another $5,000 in sales price because you’re tracking your market stats, that’s a pretty good return on investment. If you’re not looking at it, you’re just spending money haphazardly and you’re not giving yourself the ability to improve.

I know one thing that you do that I believe every investor should do, but I’d say maybe 1 out of every 10 investors actually does is recomping the property on a weekly basis.

That’s a game-changer.

Most investors you’re going to comp a property when you’re making the buying decision. You get into that, you do the rehab and then, “It’s time to list it. Let me go see what it looks.” That’s very relevant right here because you made a comment, did we go over budget because we want it to? I’m assuming if you’re adding $30,000 to a budget, you have data supporting that, that $30,000 is going to equal something greater. Why don’t you unpack that a little bit?

What we do in our office, Dan, our Acquisitions Director, who was on a previous show and sharing information, recomps our homes almost daily, if not every other day. The reason we do that or how we do that is we set up automatic filters through the MLS that notify us of comping data to the properties that we own. We set that up automatically. In real-time, we’re getting updated, did a comp for one of our properties go pending? Did a new active come on that’s a comp for a home that we own? By doing that, it allows us to make adjustments to the renovation.

We never want to spend more, but if we make a business decision to spend more, it better pay off. I’ll give you an example. We own a home not too far away from the office in La Jolla, which is a higher price neighborhood here in San Diego. Through the recomping process that I mentioned, a comp came up that showed us that if we spent more on some outdoor decking and outdoor space and we’re planning on, we can get that money back to the tune of $2 to $3 back per dollar spent. We’re going to spend about $30,000 more on this renovation budget.

Based off of the data, that’s going to allow us to get at least another $100,000 in sales price, maybe even $150,000 or $200,000 back in sales price. I’m not green-lighting that $30,000 extra just because, “It did look good. That’d be cool. I’d like to see that in my house.” It’s because the data’s saying that if we do that, we’re going to get that money back and then some. Recomping the homes that you own every single week at a minimum is mandatory. I’ll use the word mandatory, especially in this market with what’s happening but even beyond that, it’s important.

The market’s so dynamic anytime, but values are changing so quickly and lots of times investors that are following what we teach are going to be setting their own comps. You want to be looking at the market data and recomping your property weekly. There’s a lot of other stats we track on the renovation side. Beyond the ones we mentioned, if you want to look at time. As a renovator, you’re focusing on what did you spend and how long did it take?

You want to look at the amount of time that it took you to renovate and then back that into breaking down the time you spent on the renovation into and then divide into it the overall budget you spent. The productive periods to look at how much money are you spending construction-wise weekly and monthly? Which is what we do at CT Homes. Over time, that allows you to do a better job of forecasting and projecting how long it’s going to take you to renovate a home.

If you can track it, you can improve it.

That’s how you get better data across different types of renovations. Maybe you have a project that’s $100,000 budget versus $40,000, bringing that dollar in levels the play in the field there. The more money you’re spending on a weekly basis, the more work you’re getting done. The quicker the project is moving along.

Those are the big ones on the renovation side.

Let’s close it out with sales. Now, we’re liquidating these properties. List to ARV is something I know you pay a lot of attention to. Talk about that for a moment.

When you buy a home you have an estimated repair value, what it’s going to sell for. When we get done with the property and bring it to market, what did we list it for? We compare those two numbers. What do we think we would sell it for? What do we list it for? In the market we’re in, lots of times that number is going to increase what you thought you could get for it versus what you’re going to sell it for. We look at those numbers and we track that.

We want to see, is that relationship consistent with what we’re seeing in the market stats too? When we see changes in the market stats, we can dial that down. There are also conversations that we have around listing strategies. If the house is worth $200,000, do you list it at $200,000 or do you list it at $179,000 and want to get more people in there? We’re always looking at what do we think we would be able to sell the home for? What are we bringing it to market at? When we go to sell the home when the home’s closed, what did we get for the home? We look at that relationship.

Where are you guys trending overall? Do you know off the top of your head?

We’re 100% of the time this year. That’s every time. We’ve been selling the homes more than we projected buying when we bought it, our ARV. Almost 100% in the ‘90s, we’re getting more than we’ve listed the property for when we went to sell it. Some of that is because we’re being strategic in how we list the homes. A lot of that is related to the market stats in our county, in which we’re at a historically low inventory in our market. We’re trending well in that department.

That is called investing with the wind at your back.

It’s more like a hurricane at your back.

I remember talking to your acquisitions manager. He made a comment that helped me wrap my mind around how hot this market is. He made a comment almost like, “ARV is almost a thing in the past.” To where now you have to look at ARV, but you have to look at, “It’s worth this, but was somebody’s willing to pay for it? What’s the market value?” People are making offers on homes, waiving appraisals. The ARV sometimes can be irrelevant. How are you factoring that one?

It also goes back to what we shared at the top of the show, where we were talking about the stats that you’re tracking in the market that you bought that home in the percentage of list price that someone is receiving. As you shared in that ZIP code, it’s more than 100. We’re paying attention to that. The market value is the value of the home the day that you put it on the market. When we look at ARV, we need that number to know our numbers when we buy. That’s important, but it’s not as important when you go to sell the home is. What’s the home worth right now?

We never list the home at ARV from a number that we had 3, 4 or 5 months ago, we look at the current market value with the most relevant data. That’s recent sold within the last month. Hopefully, there are some. We also look at pendings and we call those pendings to determine how much activity did they get? Try to find out what they’re pending at. That market value is, “What is the home worth now in that ZIP code, in this current environment, with the current interest rates.”

We use that information when we go into our negotiations. My phone’s in my pocket, it’s giving me a leg massage because we listed three homes at the end of last week and my phone hasn’t stopped ringing. We’re now on one property $150,000 above what we listed it for. I’ll likely drive the price up even more because in this particular ZIP code, there is very little inventory. It’s way less than a month’s supply. They’re getting more than 100% of the list price like the stats that you shared in that other ZIP code. It’s crazy.

As an investor, you don’t want to get caught up in speculation. I’ve been selling homes 5% more. You want to be basing your negotiation decisions on your list price, sales price, etc., off of actual data. All in all, selling homes is never easy, but in a seller’s market that we’re in, it’s ripe out there if you got homes on the market.

Key Performance Indicators, folks. If you can’t measure, you can’t improve it.

If you can track it, you can improve it, but if you don’t know what to track, like we talked about, and you’re not keeping it in front of you like looking at it month over month, week over week, you don’t have anything to improve. We often make sports analogies because we’re active in sports. You’d go and look at a football team when they go out on the field. They’re not figuring out the plays that they’re going to run or the strategy when they hike the ball for the first time. They spent days, weeks, months and years developing strategies and studying film. This, what we’re talking about here, Key Performance Indicators, is studying film for real estate investors.

It’s a principle that’s much broader than real estate as well. In any area of your life, you want to improve. You look at, “What are the tangible ways that I can measure, quantify and track them?”

As a new parent, which I was a few years ago, a lot of new KPIs you look at. You’re looking at the amount of hours of sleep. Relate that to the amount of hours the baby sleeps. You’re looking at the color and the size of the poop. You’re looking at that KPI. Everything that we do, there are things that you can look at and track. From a health perspective, as a human being, there are things that we go get measured with blood work and things like that.

To check the health of your business, this is how you do it. It’s great to make money on a transaction that’s awesome. If you make $30,000 on your next renovation after you sell it, but you spent more on the rehab and the market bailed you out and you didn’t know that, it wasn’t that good of a deal because the market doesn’t always bail you out.

 

Years ago, I was at a marriage conference with my wife and I liked this conference because they were talking about a lot of statistics and all of that. Also, during this phase, FortuneBuilders were instituting a lot of new KPIs and all of that. They’re talking about a healthy marriage, you have sex this number of times over a week and all of this stuff. You’re learning from what I consider to be the best in the business. I watch a lot of NBA basketball and Shaq was like, “That was a grown folk move right there.”

I feel like this was a grown folks’ real estate investing episode. This is many years of experience. Things you’ve been tracking from the very beginning. Whether you’re an experienced investor or starting off brand new, make sure you got these dialed in in your business. We appreciate you tuning in. It’s always a pleasure. It’s always an honor to serve you and walk out our mission of helping people realize their purpose through financial education. That’s what we’re here for.

Follow us on social media, DM. We’d love to get to know you guys. Continue to ask questions. Let us know what you’d like to see more of. If we hit something on an episode, there are honestly so many things we went through that could have been a whole show. If there are things you want to be expanded on, please let us know. I appreciate you guys as always. We’ll see you on our next episode.

Important Links:

• JD Esajian
• Dan Wright – Previous episode