The Most Important Metric in Your Real Estate Business

By Andy Mulholland

He has a background in leading a top real estate team for over a decade and an understanding of the critical role of clear financials, Andy, along with his wife Ellyn, a seasoned real estate CFO, co-founded Simple-Numbers.

Most real estate business owners believe they understand their profitability because they track sales volume and net profit. Those numbers feel familiar and reassuring. But there is one metric the industry rarely talks about, even though it tells a much clearer story about business health. That metric is adjusted net profit.

Why do profit numbers often cause confusion? When team leaders compare profit, they often think they are speaking the same language. In reality, they are not. Some include personal production in their profit numbers, while others do not. Some view profit through a tax lens, which can hide what the business truly earns. As a result, owners end up comparing numbers that are not measured the same way, which creates a false sense of confidence. This confusion makes it difficult to know what a healthy real estate business actually looks like.

What does adjusted net profit show? Adjusted net profit removes the noise by focusing on one simple question. What does the business earn if the owner is not in production? This number removes personal sales and looks beyond tax strategy to show how the business performs on its own. It creates an apples-to-apples comparison that reveals whether the systems, team, and structure are truly profitable.

The reality many owners discover. When owners calculate adjusted net profit, the result is often unexpected. A business that appears successful on the surface may not be as profitable once personal production is removed. A large team may look impressive, yet still struggle financially behind the scenes.

This does not mean the business is failing. It means the numbers are finally being viewed the right way.

Why does this metric matter? Adjusted net profit shows whether a business can stand on its own or whether it depends on constant owner involvement to survive. Sales volume shows activity, but this metric shows sustainability.

Running a real estate business should not feel unclear or uncertain. When you focus on adjusted net profit, you get a clearer picture of what your business is truly earning and whether it can operate without relying on your personal production.

If you’re reviewing your numbers and have questions about what they really mean, schedule a discovery call today. I can help clarify where your business stands and what to look at next.