We’ve seen investors post 25% ROI on paper and nearly go broke because all their capital was tied up in one deal for 18 months. When the next opportunity came along, they couldn’t move. They made money, but missed better deals that would’ve compounded faster.
ROI alone doesn’t tell the full story. It’s a snapshot without context – a number that ignores time, efficiency, and opportunity cost. The difference between investors who scale and those who plateau isn’t just about finding good deals. It’s about tracking the metrics that reveal whether you’re running a business or just doing deals.
Here are five metrics experienced operators obsess over – and why they matter more than ROI in isolation.
1. Velocity of Capital (Annualized Return)
A 20% return in six months isn’t the same as a 20% return in 18 months. Time is the variable that turns a decent deal into a great one – or a great deal into a mediocre one.
Velocity of capital measures how quickly you can deploy, return, and redeploy your money. If you make 15% in six months and can do two deals per year, that’s a 30% annualized return. Compare that to a 25% return that takes 18 months – you’re better off with the faster deal.
The faster you can turn capital, the more deals you can take and the more compounding works in your favor. Speed isn’t about impatience – it’s about mathematics.
ROI measures total return without accounting for time.
IRR (Internal Rate of Return) factors in the timing of cash flows and gives you an annualized return that accounts for when money comes in and goes out.
For quick flips and short-term projects, ROI works fine. For anything longer or with multiple cash flows, IRR tells you what’s actually happening.
2. All-In Cost of Capital
Interest rate is just one piece of your cost of capital. The real number includes origination fees, points, closing costs, holding costs, and opportunity cost, what else you could have done with that money.
A loan at 9% with 2 points and fast closing might be cheaper than a loan at 7% that takes 60 days and causes you to miss the deal. When you factor in lost time, contractor delays, and holding costs, the “expensive” money often costs less.
Calculate your true cost of capital on every deal. It’s the only way to know if you're actually making what you think you’re making.
3. Leverage Efficiency (Capital Deployment)
Leverage efficiency is how well your capital is working relative to the debt supporting it. It measures how much leverage you’re using compared to the equity you deploy.
If you can put 20% down instead of 40% and still hit your return targets, you’ve freed up capital for another deal.
Efficient leverage isn’t about maximizing debt recklessly – it’s about deploying the minimum equity necessary to hit your returns so you can put the rest to work elsewhere.
The most efficient investors aren’t the ones going all-in on one project. They’re the ones running multiple projects simultaneously because they structured each one to require less of their own cash.
4. Deal Flow Conversion Rate
Track this from top to bottom: deals analyzed → offers made → offers accepted → deals closed
The ratios vary by market and strategy, but if you’re analyzing 50-100 deals to close one, you’re either in an extremely competitive market or underwriting too conservatively. If you’re closing 30-50% of your offers, you might be overpaying.
Your conversion rate reveals your market positioning. It tells you whether you’re competitive, whether your underwriting is realistic, and whether you’re wasting time on deals that were never going to work.
Most investors don’t track this, which is why they don’t know where their process is breaking down.
5. Exit Timing Variance
This is the difference between your planned exit timeline and your actual exit timeline. If you consistently plan for six-month flips but average nine months, you’re underestimating by 50%.
That variance costs you money in holding costs, opportunity cost, and capital velocity. Track your variance across multiple deals. If you’re consistently off by the same margin, adjust your underwriting to reflect reality.
If your variance is unpredictable, you’ve got execution problems – contractor issues, scope creep, or poor project management.
These five metrics reveal the difference between running a real estate business and just doing deals. ROI tells you if a deal was profitable. These metrics tell you if you’re building something sustainable.
Track them monthly. They’ll show you what’s working and what’s not long before your bank account does.
At Lendyx, we look at deals the same way experienced investors do – through the lens of time, efficiency, and execution. Because ROI alone never tells the full story.
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