Tracking your rental business’s growth over time is an excellent habit.
You can garner many insights from your property management analytics and metrics. Sometimes called key performance indicators (KPIs), these numbers can be interpreted to tell you about the state of your cash flow, general trends in vacancies and turnover, and the overall health of your business.
One benefit to using property management software is that these metrics are readily available. Instead of calculating and tracking KPIs yourself, your software automatically collects data and plots trends over time.
However, access to these numbers doesn’t always mean you’ll understand what each means in the broader context of your rental management. What kinds of information can metrics offer? How do you interpret them?
Here are five examples of performance metrics landlords should track and how to interpret them.
- Tenants Won and Lost
Not every approved application will lead to a signed lease. Some tenants will inevitably find another attractive property or change their minds about renting yours.
Tracking tenants won and lost can help you realize why you might be winning over some tenants but not others.
The number of tenants won tell you how many units you successfully filled each year and determines the consistency of your revenue stream. However, in a year with a high percentage of tenants lost, you’ll likely have less expendable income to dedicate to other goals, like renovations.
This KPI is most useful when paired with qualitative data from tenants about why they chose not to rent your properties. When a prospective tenant decides to decline your offer, ask why. Was your rent too high in comparison to other local rentals? Did they receive inadequate attention? Paired with general stats, this information helps you decide what you should change to improve your tenants won.
- Tenant Satisfaction
It’s also essential to collect data from your current tenants. What do your tenants like about their rental experience? What do they wish was different?
Tenant satisfaction is best assessed by an annual or bi-annual anonymous survey. If their names are not attached, tenants feel more comfortable being honest about what could be improved. It might be useful to collect quantitative as well as qualitative data.
Tenant satisfaction data might instruct you about where to focus repairs, renovations, additional staffing, and communication efforts. It can also clue you in on small problems tenants haven’t mentioned to you directly, but that may interfere with their satisfaction.
- Occupancy/Vacancy Rates
What percentage of your units are occupied from year to year? How many months of revenue did you lose due to vacancies? How often do tenants leave?
Occupancy and vacancy rates help you answer these questions. These KPIs vary depending on various factors, including rental market trends, unemployment rates, economic recessions, booms, and whether your properties are in urban or rural areas.
Combined with this general market knowledge, your occupancy and vacancy rates are critical in determining how much you should charge for rent. For instance, if your vacancy rate is unusually high and your rent is higher than the market average, it might be time to adjust.
Many property management software platforms include occupancy and vacancy KPIs you can view at any time. Platforms like Buildium even enable you to compare your performance to your competitors.
- Turnover Costs
How much does it cost to turn over a unit?
This KPI includes renovation and repair costs, cleaning fees, supplies, the cost to screen a new tenant, and anything else that needs to be done before a new tenant can move in.
Many landlords overlook this metric since it may be difficult to calculate. Your turnover costs may vary depending on what supplies you have on hand and how well the previous tenant took care of your property.
However, this KPI can provide insights into how to increase efficiency in tenant turnover so you can move in a new tenant as soon as possible.
- Net Income and Revenue Growth
If you aren’t already, always keep an eye on your net income and revenue growth. This KPI gives you a broad picture of how well your rental business is keeping up with your competitors and the market.
These metrics are also likely the first you would look for. If there are noticeable downward trends in either net income or revenue growth, you can look to the other KPIs to determine the specific cause and possible solutions.
Using Data to Grow Your Business
In a data economy, data drives your decision-making. Tracking your KPI trends across months and years is the best strategy for deciding when and where to improve. Remember that with property management software, these numbers are instantly available to you. Track your growth, notice problems, and stay on top of your rental competition with performance management software metrics.