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Updated over 3 years ago,
Metric for Success in Real Estate?
I am just curious -- why do I continue to hear of the following as an indication of success in real estate when neither is appropriate? --
[1] "# of Doors" (i.e. "I have 40 doors in my portfolio")
[2] "X Dollar Portfolio" (i.e. "I have a 2 million dollar portfolio")
As for the former, the average property in one investor's portfolio may be a fraction of the average value in another investor's portfolio, while each have the same ROI. Clearly, we would prefer to be in the position of the former investor, who revives more monthly cash flow.
As for the latter, one may be a partner on the majority of properties in his portfolio; yet, he is aggregating their total value, in spite of having little to no equity on any of them, and receiving such a small cut of the cash flow. Regardless, each partner is reduced to the same level by this method.
Why not use NET WORTH as an indication of success (the fraction of net worth generated by real estate investing)?