11 Accounting Metrics Every Landlord Should Track
If you’re a landlord or property manager, you’re no stranger to the hustle and bustle of the real estate industry.
From ensuring that tenants are well taken care of to maintaining a high occupancy rate, you wear many hats.
To stay competitive and ahead of the curve, it is essential to track and measure your performance with property management key performance indicators (or KPIs).
In this guide, we’ll discuss the 11 most important KPIs to consider, why they are important, how to track them, and which are the most important examples.
So, to begin, let's go over the importance of tracking these metrics.
Why Are Real Estate KPIs So Important?
Property management KPIs are important for any property manager because they provide an at-a-glance measure of performance.
By tracking these KPIs, you can easily see where your business is performing well and where it could use improvement. Additionally, tracking KPIs can help you make informed decisions about how to allocate resources and set goals.
Each KPI reflects a different aspect of your business and provides insight into how you are performing relative to your competitors.
The ability to track KPIs allows you to proactively manage your business and make informed decisions that will help you stay ahead of the competition.
How to Track Real Estate KPIs
Tracking property management KPIs is not as difficult as it may seem. There are many useful tools available that can help you track your KPIs and measure your performance.
For example, there are software programs and applications that allow you to enter data and generate reports and graphs that illustrate your performance.
You can also track your KPIs manually by creating spreadsheets that track the various metrics associated with your business. This can be a great way to monitor your performance and compare it to previous performance.
Additionally, you can use third-party services to track your KPIs and provide you with useful insights and analysis.
So, now that we know why we should track these metrics, and how, let's talk about some of the most important ones that should be tracked.
Most Important Real Estate KPIs
In this section, we’ll explore 11 of the most important KPIs, why each one is important, and how to track them.
They are:
1. Occupancy Rate
The occupancy rate is an incredibly important KPI for real estate.
This KPI measures the percentage of units that are occupied in a given period of time, usually over a month or a quarter.
A high occupancy rate is a sign of a healthy, successful business, while a low occupancy rate indicates that there may be a problem.
To track your occupancy rate, you need to know how many units you have available and how many are being rented out. You can then divide the number of occupied units by the total number of units to get your occupancy rate.
The occupancy rate is a great way to assess the performance of your property management business.
It can help you with real estate metrics to determine whether or not your property is meeting its goals and whether or not it’s in a good financial position. It can also give you insight into the effectiveness of your real estate sale marketing and pricing strategies.
2. Revenue Per Available Unit (RevPAU)
Another important KPI that property managers should track is revenue per available unit (RevPAU).
This KPI measures the amount of revenue generated by each unit over a given period of time. To calculate this metric, you need to know the total revenue generated by all units in a given period and the total number of units available during that time.
By dividing the total revenue by the average sold price and total number of units sold average dollar amount, you can get the RevPAU.
The RevPAU is a great way to measure the profitability of your property as well as the revenue growth. A high RevPAU indicates that your property is generating good revenue, while a low RevPAU indicates that there may be an issue with pricing or occupancy.
Keeping track of this KPI can help you make sure your property rental income is as profitable as possible.
3. Lease Renewal Rate
The lease renewal rate is another important metric for property managers to track.
This KPI measures the percentage of tenants who choose to renew their leases. It’s a great way to measure the satisfaction of your tenants and the effectiveness of your property management strategies.
To track this KPI, you need to know how many tenants have chosen to renew their leases and how many leases have expired in a given period of time. You can then calculate the lease renewal rate by dividing the number of renewed leases by the total number of leases.
The lease renewal rate is an important metric for property managers because it can give you insight into how satisfied your tenants are with your property.
A high lease renewal rate indicates that tenants are happy and that your property management strategies are effective, while a low renewal rate indicates that there may be a problem.
Monitoring this KPI can help you identify areas for improvement and ensure your tenants are getting the best possible experience.
4. Average Rent Price
The average rent price is a great way to measure the performance of your property. This KPI measures the the average price and amount of rent that tenants are paying each month.
To calculate this metric, you need to know the total amount of rent that tenants are paying in a given period and the total number of units that are being rented out.
You can then divide the total amount of rent by the total number of units to get the average rent price.
The average rent price is an important metric for real estate agents and property managers because it can give you insight into how much tenants are willing to pay for your units.
A high average rent price indicates that tenants are willing to pay top dollar for your property, while a low average rent price indicates that there may be an issue with pricing or occupancy at investment property.
Keeping track of this KPI can help you ensure that your property is profitable and also allow a real estate agent to accurately advertise it, as well as giving insight to the real estate demand growth in the area.
5. Vacancy Rate
The vacancy rate is another important KPI for property managers to track. This KPI measures the percentage of units that are vacant in a given period of time.
To calculate this metric, you need to know the total number of units that are available and the total number of units that are being rented out. You can then divide the number of vacant units by the total number of units to get the vacancy rate.
The vacancy rate is an important metric for property managers because it can give you insight into the performance of your property.
A high vacancy rate indicates that there may be an issue with pricing or occupancy, while a low vacancy rate indicates that your property is meeting its goals.
Keeping track of this KPI can help you identify areas for improvement and ensure that your property is as profitable as possible.
6. Tenant Retention Rate
The tenant retention rate is another important KPI that property managers should track. This KPI measures the percentage of tenants who have stayed at the property for a given period of time.
To calculate this metric, you need to know the total number of tenants who have stayed at the property and the total number of tenants who have left in a given period of time.
You can then divide the number of tenants who have stayed by the total number of tenants to get the tenant retention rate. The tenant retention rate is an important metric for property managers because it can give you insight into how satisfied your tenants are with your property.
A high tenant retention rate indicates that tenants are happy and that your property management strategies are effective, while a low retention rate indicates that there may be an issue with tenant satisfaction.
Keeping track of this KPI can help you identify areas for improvement and ensure your tenants are getting the best possible experience.
7. Lease Cancellation Rate
The lease cancellation rate is another important KPI for property managers to track. This KPI measures the percentage of tenants who have canceled their leases in a given period of time.
To calculate this metric, you need to know the total number of tenants who have canceled their leases and the total number of tenants who have not in a given period of time. You can then divide the number of cancelled leases by the total number of leases to get the lease cancellation rate.
The lease cancellation rate is an important metric for property managers because it can give you insight into the effectiveness of your property management strategies.
A high lease cancellation rate indicates that there may be an issue with tenant satisfaction or pricing, while a low cancellation rate indicates that your property is meeting its goals.
Keeping track of this KPI can help you identify areas for improvement and ensure that your property is as profitable as possible.
8. Maintenance Cost Per Unit
The maintenance cost per unit is another important KPI that property managers should track. This KPI measures the average amount of money spent on maintenance for each unit in a given period of time.
To calculate this metric, you need to know the total amount of money spent on repair and maintenance costs and the total number of units that are being managed.
You can then divide the total amount of money spent on maintenance by the total number of units to get the maintenance cost per unit.
The maintenance cost per unit is an important metric for all property owners and managers because it can give you insight into the effectiveness of your property management strategies.
A high maintenance cost per unit indicates that there may be an issue with maintenance or pricing, while a low cost indicates that your property is running efficiently.
Keeping track of this KPI can help you identify areas for improvement and ensure that your property is as profitable as possible.
9. Net Operating Income (NOI)
The net operating income (NOI) is another important KPI that property managers should track.
This KPI measures the total amount of money that a property generates after all operating expenses have been paid. To calculate this metric, you need to know the total amount of money generated by the property and the total amount of money spent on operating expenses.
You can then subtract the total amount of money spent on operating expenses from the total amount of money generated to get the NOI.
The NOI is an important metric for property managers because it can give you insight into the overall financial health of your property.
A high NOI indicates that your property is profitable, while a low NOI indicates that there may be an issue with pricing or occupancy.
Keeping track of this KPI can help you make sure your property is as profitable as possible.
10. Tenant Satisfaction Score
The tenant satisfaction score is another important KPI that property managers should track. This KPI measures the overall satisfaction of tenants with their living experience at the property.
To calculate this metric, you need to survey tenants and ask them to rate their satisfaction on a scale from 1 to 10. You can then calculate the average satisfaction score by taking the total score and dividing it by the number of tenants.
The tenant satisfaction score is an important metric for property managers because it can give you insight into how satisfied your tenants are with your property. Any real estate agency can also use this metric to measure how satisfied tenants were with their services.
A high tenant satisfaction score indicates that tenants are happy and that your property management strategies are effective, while a low satisfaction score indicates that there may be an issue with tenant satisfaction.
Keeping track of this one KPI for your real estate business can help you identify areas for improvement and ensure your tenants are getting the best possible experience.
11. Expense to Revenue Ratio
The expense to revenue ratio is another important KPI for property managers to track. This KPI measures the ratio of expenses to revenue for a property sales data given period of time.
To calculate this metric, you need to know the total amount of expenses and the total amount of revenue for a given period. You can then divide the total amount of expenses by the total amount of revenue to get the expense to revenue ratio.
The expense to revenue ratio is an important metric for property managers because it can give you insight into the overall financial health of your property.
A high expense to revenue ratio indicates that there may be an issue with pricing or occupancy, while a low ratio indicates that your property is running efficiently.
Keeping track of this KPI can help you identify areas for improvement and ensure that your property is as profitable as possible.
Conclusion
Property managers must track key performance indicators (KPIs) to monitor progress and identify areas for improvement.
Keeping track of these KPIs can help you make sure your property is as profitable and successful as possible.
However, if you would like to learn more about property accounting in general, be sure to continue reading through this hub to learn everything you need to know!
