In business, metrics and indicators provide insight and forecast growth – that’s why we’ve compiled these common key performance indicators (KPIs) for property managers to monitor. Simply put, they show how well your business is performing.
Choosing the right KPIs can be a Herculean task
They can change depending on industry, company size, even the time of year.
Many businesses focus solely on traditional financial indicators like profit, but KPIs are more than just how much money is in the company account.
In commercial property management today, there are hundreds of KPIs that property management companies use to measure their performance.
Trying to track and manage every issue relating to tenancy, maintenance, the financial performance of the business, can be overwhelming. This is where identifying the business processes that drive your business is important.
So, which KPIs should you measure?
That depends on your business and the data most important to you. Just remember to focus on a high-level overview of your business so you don’t get bogged down in minutiae.
At Admiral Group, we find that the following 6 KPIs will apply to any property management business that wants to grow:
1. Property Acquisition KPI
To ensure a consistent stream of revenue, a property manager must always be monitoring their net property acquisition. Simply put, the more properties they can manage, the more revenue they generate from renters.
With an estimated 10-20% turnover in a year, losing clients is inevitable. However, it’s wise to follow up with any such clients to understand why. This feedback can help direct your business development techniques towards lowering your rate of turnover.
2. Occupancy Rates KPI
Are you currently achieving over 93% occupancy rates with your properties in urban areas?
Depending on your location, this may be good, or even bad.
Yes, bad, if the average O.R for the market you serve is 96% or more.
Hence, it’s vital for property managers to know both the occupancy rate of their portfolio and the average occupancy rate in the market they serve. Comparing both numbers can help you spot any inefficiencies in your business
3. Outstanding Debt KPI
Having a lot of arrears on your books severely limits company cash flow and negatively impacts income targets.
By monitoring arrears as a KPI, you can also gauge the performance of individual property managers based on their ability to collect rent. It also allows you to pinpoint the location and causes of debt to ensure they are managed ASAP.
4. Tenant Turnover KPI
Stats from the commercial property management industry report that the average turnover (average duration of stay) for properties in urban markets averages between 12 and 24 months.
For rural areas and suburban markets, it’s between 24 and 48 months; are your properties achieving these figures?
If you have much higher turnover rates than the average, this could spell trouble for your financial forecast, as it’s dependent on turnover.
Are repairs regularly overdue? Is the rent charged higher than the average for the area? How well are you keeping your tenants? Answering these questions honestly, will give insights into the reason for a high turnover rate.
Having a high turnover rate is costly; one estimate claims the cost of losing and finding a replacement tenant can cost up to three times more than renewing a lease.
5. Average Days-to-Lease KPI
The longer a property remains empty, the lower the revenue generated. This prompts property managers aim to eliminate any vacancies.
One way to do this is to compare the average days-to-lease for your properties to the market average. Let’s assume it’s taking longer than the average, this can mean a business process is inefficient, i.e. another KPI isn’t being met.
Upon examination, if the business seems to be growing, and it’s just an issue with an individual unit, it may be due to poor, ineffective advertising strategies.
6. Maintenance and Repair KPI
Repairs are often a property owner’s largest expense.
For a property manager, they can be an immense time-suck too.
A critical look at maintenance costs can bring an increase in net revenue. It’s also crucial for property managers to set up an effective process for reporting maintenance issues, deploying contractors, payments etc. This helps ensure tenants are kept happy, repair jobs are done on time and saves the office team critical time.
Tracking KPIs doesn’t need to be difficult
Now that you have some ideas of KPIs to help you track your property management business, remember that you must determine which KPIs are best for your company. For the best results, ensure all data is accurate, timely and keep your indicators simple.
While revenue, costs and ultimately, profit, are often used to measure business growth, these alone are not the most useful indicators for making business decisions.
With KPIs providing a month-to-month (or year-to-year comparison), you can quickly identify any weaknesses in your operations.
Just don’t make the mistake of saying “I’m too busy to monitor my numbers”.
With an all-in-one business management tool like Soft4 Real Estate, you can track all your key metrics. Powered by Microsoft Dynamics NAV, Soft4 Real Estate allows property managers to enjoy all the advantages of a world-class ERP system: it’s easy to master and work with; the role-based experience; real-time data and integrated financial accounting, document management, reporting and business analysis tools; all seamlessly integrated with the Microsoft Office products.
Don’t waste any more time scrambling for solutions, contact Admiral Consulting Group today for more information and a complimentary consultation, 732-257-7440 or email@example.com