Your properties are an investment which requires ongoing upkeep and targeted funding in order to produce the greatest return. By analyzing the right data, you can determine what’s working and what isn’t. But what analytics are the most important? Here are four key metrics to focus on first.
Comparing the occupancy/vacancy rate of your properties to the market average can help you identify areas for improvement and opportunities you may be missing out on. For instance, if your vacancy rate is significantly higher than market average, you may be charging too much or there may be issues with the property itself. Conversely, if your occupancy rate is much higher than other properties in your area, you might consider a possible rent increase to bring your property more in line with the market average.
The primary source of income for a property owner comes in the form of rent payments. It’s only logical, then, that unpaid rent would be an important metric to measure. A significant amount of payments still outstanding can impact your cash flow.
This may be an indicator that some of your internal policies could use some improvement. In particular, your tenant screening and rent collection processes. And while better screening is a future goal, providing easier and more convenient methods of payment could provide an almost instant improvement in this area.
Maintenance and Repairs
Keeping your properties in good working order is one of the biggest contributors to tenant retention. Of course things like one-off repairs and ongoing maintenance cost money. Where and how much you spend in these areas can have a serious impact on your bottom line.
Establishing long-term partnerships with contractors you can trust and who will give you the best rate is key. For other service contracts, routinely checking to see how their prices compare to others can help you optimize your spend. And, of course, making sure you’re investing in proactive maintenance to prevent bigger, costlier repairs is also important.
One more thing to note in this area is that property owners should earmark funds for occasional upgrades and renovations. By leveraging data analytics, you can identify which projects will net you the biggest return, allowing you to increase rental rates.
Another key expense you should be tracking is how much it costs you to fill vacancies. Most of this expense comes from advertising and marketing your units. And while these costs are necessary, that doesn’t mean you shouldn’t be checking regularly to make sure you’re being strategic about it.
Not all options are going to produce the same results. Different types of advertising and marketing will reach different types of tenants. Make sure you know who you are targeting so you can optimize your budget to net you the highest quality tenants for the least amount of output.
The right rental property metrics can help drive revenue and improve your business operations. But how does one efficiently measure these metrics? Property management software can tie it all together, enabling you to collect and analyze the relevant data and gain valuable insights through customized reports. From there, you’ll be better equipped to pinpoint problems as well as opportunities to optimize and grow your business.