I was presented with a challenge. To write an article on KPI (Key Performance Indicators). As is my nature, I said yes. Then I thought about the task. What numbers matter and when? Plus, this is an editorial column and not an investment financing book for the property sector.
As a general principle, it is best to have goals, targets and other clear indicators for what you want to achieve. Even more so when you have an extended amount of time before the finish. You need splits or mileposts to confirm you are staying on target. You also need to know when to declare success. But where exactly is the finish?
If you were going on holiday and did not pick a destination, how would you know if you have ar-rived? What mode of transport would be best if you could not define where you wanted to go? It does sound really basic but I am not sure that too many property investors are that clear about their investing goals. Many started out as part-time investors so they have lots of priorities. Investing can often be a ‘set and forget’ exercise rather than something which is carefully planned. This is fine for the odd purchase where there is no time pressure. But it is not a way to succeed if you want to grow a portfolio or run a property development company.
What numbers are important to monitor?
How long is a piece of string? With property, the type of investment, the phase of the project, plus other factors, are critical to clarify before you worry about the right set of KPIs. Let’s compare a buy and hold investment to a construction project. High occupancy levels are a positive KPI for the former while the same occupancy level is a bad sign for an ongoing construction project.