If you own properties or a property company, it is essential to understand how your properties are doing and performing for property management.
Due to the nature of the industry and the volatility of properties, it means that landlords and property managers cannot afford to let things slip, as this can result in a range of issues.
If you are starting, there are a couple of metrics you should be able to understand to monitor them correctly.
First, you should understand your key performance indicators, which are used to monitor the performance of your property portfolio.
This article will review ten metrics landlords and property managers should know and measure regularly.
1. Vacancy Levels
If you have one property, this won’t be hard to measure, but as you grow your portfolio, you will need a way to measure and monitor your vacancy levels.
It is essential to make informed decisions instead of winging them and hoping for the best, and by knowing your vacancy levels, you will undoubtedly be able to make more informed decisions. The saying goes, you have to spend money to make money in business, and this is especially true for property.
One expenditure is marketing and marketing with a purpose. As you want maximum occupancy, you need to think wisely about the type of marketing and to whom you are marketing.
Whether it’s signage, social media or advertisements, each form of marketing is best for a specific type of tenant.
2. Assessing Rent Levels
If there’s one thing you don’t want to be doing, it is selling yourself too short or too high. It’s challenging to take the brutal truth on how much you should charge for rent, no matter the cost.
It’s essential to understand how much you are charging compared to other properties in that area that are also similar to the property you have. The average rent metric is what you strive for. It can be the difference between keeping good tenants or losing them as they went with a better offer.
For this, a regular analysis should be conducted where you compare properties that are similar to yours in terms of how much they charge for rent, but more often than not, you will find that you may not be charging enough, especially with a market that fluctuates constantly.
Profit is why you are in this industry, so ensure that your costs are covered and that you are making enough to have some spare after the mortgage and other charges.
3. Repairs And Maintenance
It is no secret that most properties need much work done before renting out, and even whilst it is tenanted, there will always be things that need repair or maintenance.
Repairs and maintenance make up much of the property management cost. When you are a landlord, it is essential to keep a critical eye on all repair fees as it can be expensive and time-consuming to find and hire separate workers all the time.
It can be difficult compiling a list of jobs and finding the best prices, which is why many landlords and property managers have a list of tradespeople that they trust and are affordable for a long-term database.
4. Keep On Top Of Tenancy Schedules
It can be challenging to stay on track of your properties and tenancy schedules if you have an extensive portfolio, but it is essential to know who is in what property, how many people are living in that property, how long their tenancy is for and when it expires.
This can easily be monitored and tracked when you create a tenancy schedule report that details all of this information. Doing this will give you a much clearer view of your tenants and their terms.
You can do many things with these forms, but having reports that have alerts will help you to keep track of events such as the end of tenancy, rent reviews, property reviews and much more.
5. Arrears And Cash Flow
If there is one thing that you don’t want issues with when owning properties is cash flow issues and bad debtors that result in arrears.
If you have multiple properties and many have arrears, this can cause severe issues with cash flow and could be disastrous for your portfolio. Minimising these arrears and keeping on top of collections should be the main priority when you have tenants.
If you are an individual landlord, you should assess your tracking systems and keep up with arrears. If you are suffering from bad tenants and arrears, it is worth speaking to a solicitor for landlord legal advice to help you retrieve this money.
This is why keeping a record of the tenants who owe money and how long they have been in arrears is essential.
6. Profits And Losses
As we said earlier, making informed decisions is essential, so profit and loss statements are critical. It helps to understand the net income to help you with your decision-making process.
The statement will show the revenue and expenses of each property you hold based on the invoices you receive rather than the payments that have been processed. This makes it much easier to analyse and is also much more accurate.
With this, you can make informed growth, expansion or renovation decisions.
7. Revenue Growth
Just like you will monitor your occupancy levels, profits and losses, you will also watch your revenue yield with an eagle eye. It is vital for year-on-year monitoring and growth as it shows you where you are doing well and where you aren’t.
This, in turn, shows you where you need to focus your efforts and where properties are running well and can be left alone for a short while — this is where your critical thinking comes into play.
When you have year-on-year data, you should create forecast sheets and reports showing how much you can make in that period, allowing you to plan further for the future. It will also show you where to expect quiet spells in the year.
To remain successful in being a landlord or property management agency, these metrics are essential to understand and follow – helping you to make more informed decisions and help you to grow your portfolio.
This article was written by Elliot, who is a specialist writer in property, investment and scams. If there are any issues within the industry, he will look for the, he will find them and he will report on them.