Top 10 Key Metrics to Track for Successful Property Management

Owning an investment property is exciting. However effective management is crucial for maximizing returns. The right metrics help evaluate what’s working and what needs improvement.

Tracking occupancy rates, rent collected, maintenance costs, tenant scores, and other key data points provides visibility into the health of your business. Monitor these measurements monthly to make smart decisions.

With the proper focus on key performance indicators, you can grow a thriving rental property portfolio. Let’s go over the must-know metrics to track!

Using Metrics to Guide Your Rental Property Investment Strategy

The metrics you track go beyond just evaluating current performance – they also guide future investment decisions. For example, consistently high occupancy rates suggest a market with strong rental demand. This indicates opportunities to profitably acquire additional units. If you’re involved in property management in Los Angeles, these insights can be particularly valuable in this dynamic market.

Or data showing high turnover costs could show a need to buy updated properties that attract longer-term tenants. Metrics also reveal operational strengths and weaknesses. High maintenance expenses may signal to buy newer or professionally managed buildings next.

In summary, solid utilization of performance data does more than just measure past months. Metrics shine a light on growth potential to shape your broader investment strategy and priorities. Let the numbers guide your next moves.

Automating Metrics Tracking for Easy Monitoring

Keeping an eye on things like how many people are living in your rental properties and whether they’re paying rent can be a lot of work. But there are some really helpful tools out there that make it way easier. You can use special computer programs to keep all this info in one place and make reports quickly.

Some other tools automatically track how many people are living in your properties when they come and go. There are also websites where your tenants can ask for maintenance help and see how long it takes to get things fixed. If they pay their rent online, you can keep an eye on who’s paid and who hasn’t in real time. And you can even send out surveys by email to get feedback from your tenants.

These tools are awesome because they get rid of the need to do all this work by hand on spreadsheets. It saves a ton of time and lets you focus on making things even better for your tenants.

The Key metrics

1. Occupancy Rate

Occupancy rate measures the percentage of total units occupied and rented at a given time.

Formula: Units Rented / Total Units x 100

Aim for: At least 90% occupancy minimum. The higher, the better.

Why It Matters: Occupancy directly impacts revenue. Vacant units generate no income. Setting rents correctly helps attract tenants quickly.

2. Rent Collected

Rent collected tracks the amount of rent payments successfully received each month.

Formula: Total Rent Received / Total Rent Owed x 100

Aim for: 97-100% of rent collected monthly. Anything below requires attention.

Why It Matters: Uncollected rent quickly destroys profitability. Address late payments promptly through polite outreach and enforcement of agreed consequences.

3. Rent Increases

Rent increases refer to the percentage of rents raised during lease renewals.

Formula: (New Rent – Previous Rent) / Previous Rent x 100

Aim for: Increases of 2-5% annually depending on market rates and inflation.

Why It Matters: Moderate increases yearly keep revenue growing while retaining tenants. Balance maximizing profits and maintaining occupancy.

4. Maintenance Costs

Maintenance costs include expenses for unit repairs, turnovers, landscaping, and general upkeep.

Formula: Total Maintenance Expenses / Number of Units

Aim for: Varies by property age and type, but shoot for 10-30% of rent per unit monthly.

Why It Matters: Control costs through preventative maintenance and tenant communication to avoid large emergency fixes.

5. Turnover Rate

Turnover measures how frequently units change occupants each year.

Formula: Units Turned Over Annually / Total Units x 100

Aim for: Less than 30% turnover rate yearly. Under 15% is ideal.

Why It Matters: High turnover requires more marketing and unit readies which reduces profit. Keeping quality tenants for longer saves significantly.

6. Renter Lifetime Value

Lifetime value totals the amount of rent a tenant pays over their entire residency, on average.

Formula: Average Monthly Rent x Average Tenancy Length

Aim for: Higher lifetime values by retaining tenants longer through strong service.

Why It Matters: Long-term tenants are more profitable than short-term ones requiring frequent turnover.

7. Marketing Costs

Marketing costs track advertising and promotional expenses to find new tenants.

Formula: Total Marketing Expenses / Total New Tenants

Aim for: $200-500 marketing cost per new tenant is reasonable depending on outreach methods.

Why It Matters: Weigh marketing return on investment. Cut ineffective initiatives and double down on what works to control customer acquisition costs.

8. Tenant Scores

Tenant scores reflect the average rating of tenants on factors like paying on time, cleanliness, noise, rule-following, and responsiveness.

Aim for: Average tenant score of 9/10 or above. Address issues for any below 8/10.

Why It Matters: Good tenants are the lifeblood of profitable properties. Their experiences encourage retention and referrals.

9. Repair Resolution Time

Repair resolution time measures the average number of days to complete maintenance requests.

Aim for: 24-48 hours is an ideal turnaround for minor repairs. One week max for bigger projects.

Why It Matters: Quick resolution minimizes disruption for tenants, keeps units habitable, and protects your asset value.

10. Expense Ratio

The expense ratio compares operating costs to revenue generated.

Formula: Total Expenses / Total Income

Aim for: Below 50% is strong. The lower the better.

Why It Matters: If expenses outweigh income, profitability suffers. Manage both sides of this ratio carefully.

There are no shortcuts to profitable property management. Regularly monitoring key numbers like occupancy, rents, marketing costs, tenant ratings, and repair times allows data-driven decisions. Staying on top of these metrics ensures your investment succeeds!

FAQs About Property Management Metrics

What is the most important metric for rental properties?

The occupancy rate, since vacant units produce no income. Ensure your rents attract tenants quickly. High occupancy enables profitability.

How often should I track property management metrics?

Review key metrics at least monthly when new numbers are available. Quarterly or annually is not frequent enough to stay nimble.

What software helps track real estate KPIs?

Solutions like Rentec Direct, Propertyware, and Buildium allow tracking metrics in easy-to-use dashboards. Many integrate with listing sites too.

Should I share metrics with my property manager?

Definitely. Aligned goals and transparency on numbers benefit you both. Just be sure your manager is qualified and adequately supported.

How do I choose the right metrics to focus on?

Start by consistently tracking occupancy, rent collected, costs, lifetime value, tenant ratings, and time-to-resolution. Add other measurements later as helpful.

The Bottom Line

Property management succeeds by the numbers. When key metrics on occupancy, income, costs, tenants, and maintenance are optimized, profits and enjoyment follow. Track what matters monthly to make data-driven decisions. The rest falls into place!