For property management companies, choosing the right KPIs (Key Performance Indicators) can help teams get to the heart of what really matters. Always strictly quantifiable, KPIs help you evaluate the success of various projects or objectives, and also provide the insights to make better business decisions that drive growth. Tracking relevant KPIs enable property pros to easily spot problems and give the company a competitive edge.
While there are numerous KPIs that can be tracked, here are our Top 10 to ensure profitability, operational efficiency, and customer experience.
1. Revenue Growth
This is the one that every company lives or dies by. Revenues should never stagnate – or worse, drop! If they do start to level out, that’s your cue to look for the root cause, and see where costs have increased, or income has gone down. Using a centralized accounting tool, like our Accounting module, look at the year-over-year and month-over-month scenarios and take in macro-economic factors like inflation. See your overall financial status with centralized accounting to truly understand how your business is doing and where your best opportunities for growth are.
2. Net Income Metrics
Your ability to drive the bottom line is critical to company growth. The biggest revenue stream is inevitably rental income generated from your portfolio. Don’t forget other income as well: tenant insurance, amenity fees, telecom programs, etc. The net number comes from revenue minus costs. Be sure to drill down to the market-level of your portfolio as well to review gross income and costs. What works in Vancouver may not work in Montreal.
3. Lost/Won Property Ratio
Property turnover is normal. Your biz dev people will pick up some new properties to manage, and some owners will move on to other property management companies. This could be as much as 20% in a year. The most important thing for any team to know is this: why did you lose the business? Is it something you can address? Are they moving onto a competitor as the competitor has property management software that makes reporting easier and builds better relationships with tenants? Or does it just boil down to fees? Whatever you do, when replacing a loss with a win, always focus on acquiring better quality properties as these will ultimately bring you more growth.
4. Occupancy Rates
Know the occupancy rate on a building-by-building basis and across your portfolio as a whole, as well as the average occupancy rate in the market you serve. In comparison, if you have a higher number of vacancies, you need to look at the condition of the building, the market and how you can invest more in advertising or referrals. A good apartment vacancy rate fluctuates between 2% and 4%, depending on the market conditions. Anything over that, in an urban market, is a red flag that needs immediate attention.
5. Tenant Retention/Churn
High turnover costs you money, as the acquisition process is far more expensive than lease renewal. In fact, it’s estimated to be three times as costly. So, how well are you faring at keeping tenants? Key metric to keep in mind here is average days-to-lease.
6. Tenant Satisfaction
To keep vacancy rates down and help improve the value of the property, property management companies should conduct customer satisfaction surveys at least once a year. Your tenants see the property every day and know its condition and how it’s being run. This finger-on-the-pulse of your property will give you critical insights into where maintenance needs to be done, and where management is doing a great (or not so great) job. Improving the customer satisfaction rates of your tenants goes a long way towards driving up occupancy rates and average rent.
Pro Tip: Use a Tenant Portal to easily contact your residents and conduct surveys. (Be sure to take advantage of our free survey questions.)
7. Repairs & Maintenance Metrics
Forward-thinking property management pros are always trying to improve the value of a property through regular and preventative maintenance. This helps prevent bigger repair jobs down the road, and also keeps your renters happy. The KPIs to zero in on are repair and maintenance (R&M) costs by building or portfolio. Look for increases over the past year, as well as how your multifamily buildings compare to each other. Tenant portals are a game-changer, and if you are using Property Vista’s Maintenance and Inspections modules, you will have the ability to drill down to see the number of work orders (scheduled, completed and past due) by building or by portfolio.
You should also keep track of the proportion of expenses that is R&M, if it’s too low, the buildings could be run into the ground. Be sure to monitor work quality and response times, as those factor into customer satisfaction as well.
Pro Tip: Keep a sharp eye on utility expenses. See these tips for streamlining expenses.
8. Arrears Metrics
Property managers will want to be able to keep track of the quantity and dollar amount of arrears across the property portfolio. Arrears have a direct negative impact on cash flow and need to be monitored closely. Pull reports to slice and dice the metrics by building or number of tenants or number of days outstanding. (The rule of thumb is to never have more than 5% of your tenants at more than 7 days overdue.)
Pro Tip: Implement automated rental reminders ahead of the due date to reduce late payments, and create a series of escalating reminders after the due date to collect the money as soon as possible.
9. Ad Listing/Marketing Channel Performance
ILS, PPC, organic search traffic, social media, outdoor signage, etc – which one is bringing you the most leads? Property marketers will want to stay on top of how their listings are performing and where the most amount of leads are coming from. This will help you to allot your marketing and sales budgets.
10. Lead to Lease Conversions
So, now that you know which ad listings are performing best, what’s your conversion rate? With property management software, you can track the number of new leads generated by your ads and see which leads turn to applications and, ultimately, to successful approvals. This permits you to evaluate the effective closing rates of your leasing agents.
Pro Tip: If your leasing team is looking to up their game and capture more leads, here are six essential steps.
How Property Vista Helps
Property Vista offers online reporting and dashboard tools to help you make smart, informed decisions that will increase revenues across your portfolio. Our Accounting dashboard solutions are configurable and accessible, making it easy for you to ensure that your business is as profitable as possible. To learn more about what you can do to streamline processes and become more profitable through automation and other technology solutions, book a demo with us today!