Before improving the profitability and efficiency of your property management efforts, you need to know what to measure. Here are the 10 KPIs that every Property Manager and Landlord should track:
1. Net Property Acquisition
The more properties you manage or own, the more you can expect to receive from renters. When gauging net property acquisition, you need to evaluate properties gained and properties lost. When losing or not retaining a property, ask for feedback. As a part of property management, it's wise to track customer acquisition cost.
2. Occupancy Rates
If nobody rents your properties, you're not making any money. Every property manager should know his or her occupancy rate as well as the average occupancy rate in the market you serve.
3. Outstanding Debt
Having too much outstanding debt severely limits cash flow, especially if you're paid a percentage of money collected. Companies use outstanding debt as a way to monitor individual property manager's ability to collect rent.
4. Tenant Turnover
Turnover in urban markets average between 12 and 24 months. The average turnover rate for rural areas and suburban markets is 24 to 48 months. Smaller units have a higher turnover frequency. If your turnover rates are higher than the average, you may want to make sure maintenance and repairs are done in a timely manner, that your properties contain standard rental amenities, and that you're not overcharging.
5. Rent-Ready Costs
Related to tenant turnover is the amount of money it takes to get a property ready once it needs rented. Keep track of rent-ready costs--even if the materials come from in-house. Tracking rent-ready costs makes efficiency easier.
6. Average Days-to-Lease
The longer the property remains empty, the less money landlords and property managers bring in. Compare the average days-to-lease for your properties to the market average. Take into account price range. If it's taking longer than it should to lease your properties, you may need to evaluate your advertising strategies.
7. Net Income
Your most obvious source of income from property management is rent. A comprehensive property manager looks at other revenue streams, too--revenue from coin-operated washers and dryers, leasing of parking spaces, rental of on-site community spaces, fees charged for storage lockers, etc.
8. Maintenance and Repair Costs
Repairs and maintenance represent a property owner's largest expense. For this reason, managers and landlords should give careful consideration to repairs and replacements. A critical look at maintenance and repair costs usually brings an increase in net revenue.
9. Property Management Fees
If you price your services too high, you won't get clients. A common mistake, however, among property management companies is undervaluing their services. Compare your fees to similar property management firms in the area. When comparing, consider unique services your company provides. In other words, find out what you do that the competition does not.
10. Revenue Growth
You're either growing or dying. A year-to-year comparison will help you learn which of the two you are doing. When making the year-to-year comparison, be sure to account for economic changes; otherwise, your data might send the wrong answer.
These 10 measurable sets of data will help you monitor how successful your property management efforts are.
Published by your friends at VerticalRent