For any company, it is important to see how well your business is performing. Unfortunately, property management is an industry with many moving parts which makes tracking metrics challenging. So, which key performance indicators (KPIs) are necessary to accurately evaluate your performance? Let’s go over six KPIs for property management.
Top KPIs to Track for Property Management
Occupancy and Vacancy Rates
All property managers should always know their occupancy rate. Successful rentals have an occupancy rate of around 96 percent for urban areas. Other areas may be lower due to the lower demand for rentals. Knowing your occupancy rate helps you compare your rental property to others in the same area. If your rate is significantly better than the average property, it could show you have an excellent occupancy rate. However, it may mean you are charging lower rent compared to other properties.
Tenant turnover is common, especially for smaller units. Some tenants want to move to bigger units to start a family, move out of the city, or for other reasons. When your turnover rate is higher than normal, it could suggest some aspects of the property are not addressed. Overdue repairs, high rent, and lack of communication are reasons tenants decide to move. When tenants leave, asking why they decided to move elsewhere is appropriate.
Successful vs. Declining Properties
Monitoring your successful and declining properties is important for calculating incoming revenue. While keeping your successful properties is the key to constant revenue, fixing your declining properties is vital. When analyzing the problems with not-as-successful properties, create a plan to fix the problems to increase profits and growth over the long term.
High amounts of debt negatively affect your properties’ cash flow. Being several tenants behind on rent means you have less revenue coming in to pay for repairs and updates to the units. If there are tenants severely behind on rent payments, collect data and take the next steps to recover lost income. While eviction processes are complex and sometimes expensive, they may be necessary in some cases to cut your losses. Real estate asset management software can help with sending rent alerts to tenants, and alerts to you as the property manager when rent has gone unpaid.
Units without tenants are the easiest performance indicators for loss of cash flow. Depending on the area, rentals sit on the market for two weeks. However, if your unit is sitting there for more than two weeks, look at how you are marketing the space. Consider listing the unit in other ways to increase your chances of finding a tenant. Social media channels offer new free ways of reaching a wide audience.
Most property managers track their income from leases. Net income is one of the most valuable key performance indicators for property management, especially when combined with other income streams. Consider miscellaneous cash flows such as:
- Coin-operated washers and dryers
- Fees for parking or storage lockers
- Rental community spaces
Assess ways to increase your cash flow for the rental property such as a cleaning service for the units and lawn care.
To understand the ins and outs of your property better, know your key performance indicators. Property management KPIs indicate when you need to adjust your rental space processes. STRATAFOLIO can help you identify problem areas in your property and increase your cash flow. Schedule a 1:1 demo today!