Posted by Mitchell Vinnitsky

5 Key Metrics for a Better Bottom Line

To say 2023 flew by is an understatement. As we wrap up the current year and prepare for the next, one of the most important steps will be establishing goals for 2024 and beyond. But setting goals is really just the first step in the process. It’s how you’ll measure your progress along the way that truly matters. If you’d like to see your profits improve and achieve growth over the next twelve months, here are a few of the essential metrics you’ll need to track.

Revenue Per Unit (RPU)

This is an important metric, because even a slight increase in RPU can have a tremendous trickle effect, especially as your portfolio grows. There are several ways to improve RPU, most of which focus on optimizing the value you provide to your clients and communicating that value clearly and effectively. A couple examples of this include allowing pets for a nominal monthly surcharge or charging a small overhead fee for administrative activities.

Expenses (as a % of Revenue)

In addition to the basic property management expenses, like maintenance and marketing, there are other costs that can really add up and start chipping away at your profits. These extra expenses typically arise in the form of operational and/or facilities fees. To keep this excess expenditure at a minimum, we recommend first determining if the expense is essential. If so, rate its value. Any expenses that are not essential or do not deliver justifiable value should be eliminated.

Unit Churn

Obviously one of the most important goals of a property manager is to maintain as high an occupancy rate as possible. This matters, because the cost of filling empty units is far greater than that of keeping current renters happy. Some churn is inevitable, particularly for larger portfolios, but efforts should be made to keep this number as low as possible. As you monitor this metric, look for weaknesses and opportunities to improve your service levels so you can right the ship and get back on track.

Unit Acquisition Cost (UAC)

It’s clear that a business needs to spend money in order to grow. That said, inefficiencies – particularly in the areas of sales and marketing – can easily begin to impact profitability. To gain better insight into your UAC, try segmenting your marketing spend so you can analyze it by channel. Then, to further optimize, we recommend instituting an activity-based sales policy, and operationalizing your sales and marketing processes.

Direct Labor Efficiency Ratio (DLER)

Your DLER assesses how much revenue is left after paying for labor. DLER is a critical metric because it provides a quick and easy way to improve finances. That’s because labor is one of, if not the biggest expense for a property management business. A few questions to ask when evaluating this metric include:

  • What activities could be consolidated, reduced or eliminated?
  • What tasks could be done faster?
  • What tasks could be done for less money?

The easiest way to improve DLER is to introduce automation into the mix. By leveraging the power of automation technology, you can remove the simple yet time-consuming work from your team’s plate and free them up to focus on revenue-generating activities. Likewise, you can scale down your workforce if need be without having to reduce workload or output.

The coming year is a great time to start shifting the focus of your financial planning from reactive and gut-based to proactive through intelligent, metric-driven analysis. This will allow you to more effectively develop goals that will systematically bring your organization to whole new levels of financial success.

Want to see how INFO-Tracker can help you easily manage each of these metrics and many more? Schedule a custom product demo today.

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