Being aware of how your company is performing is vital for property management. The fragmented nature of the industry means that landlords and property managers cannot afford to let go of the reins.
So what metrics do you need to keep an eye on? What are the key performance indicators (KPIs) which can be established to monitor the performance of your property portfolio?
1. Vacancy Levels
The ability to make the right decisions must be informed by keeping track of vacancy levels. Review how the figures are stacking up. Often, landlords and property management agencies must increase expenditure in order to reap the financial gains of maximum occupancy.
Average vacancy rate: The percentage of unoccupied properties over a specific period.
Turnover time: The average time it takes to fill a vacancy.
2. Assessing Rent Levels
The average rent metric is not to be underestimated and can mean the difference between keeping hold of good tenants or losing them to more effectively priced competitors. Regularly analyse and compare your average rent against that of other, comparable, local properties.
Average rent: The mean rental income per property.
Rent comparison: Comparing your rent levels with market standards to stay competitive.
3. Management fees
Depending on the level of service provided, property management fees account for between 6-12%. Keep tabs on what your competitors are charging to work out how your own fees compare.
Fee percentage: A clear understanding of the range of management fees (6-12%) in the industry.
Competitor fee analysis: Periodically check the management fees charged by competitors.
4. Outgoings/Service charge/CAM management
Managing budgets and operating expenses is one of the most time-consuming aspects of commercial property management. Bring transparency and clarity into your operating expenses with real-time budget tracking. You will also be evaluating other revenue streams which are incorporated into service charge budgets. Ensuring you’re reconciling and managing these budgets with accurate reporting and auditing will be critical.
Service charge efficiency: Evaluate the effectiveness and ROI of the services provided.
Budget reconciliation: Ensuring accurate budget reconciliations regularly.
5. Arrears and cash flow
It goes without saying that having a quantity of arrears owed to you by tenants will seriously impact your cash flow. Minimising these arrears and keeping on top of collections should be a priority. If you’re paid a percentage of collected revenue (as opposed to a flat fee), it’s even more important.
Arrear collection rate: The efficiency in collecting overdue payments.
Cash flow stability: Monitoring the regularity and stability of the cash flow.
6. Repairs and maintenance
It can be time-consuming to shop around for tradespeople and compare prices on what different repairs should cost. That’s why most managing agents tend to have a long-term database of go-to contacts who they know and trust.
Maintenance cost: Regular tracking of the costs involved in repairs and maintenance.
Vendor relationship management: Maintaining a database of trusted tradespeople for services.
7. Property analysis
To gain a thorough overview of your portfolio performance (and, indeed, your entire business as a whole), you’ll need to put together an analysis report of the property, detailing areas including rent levels, property values, arrears, income and expenses, WALT/WALE calculation, and more.
Portfolio performance: Detailed analysis of rent levels, property values, income, and expenses.
WALT/WALE Calculation: Understanding the weighted average lease term for a portfolio.
8. Revenue growth
You may be watching your occupancy levels, but are you paying attention to the actual revenue yield? Monitoring your revenue growth will show you how your business is performing year-on-year. Where are you doing well, and what could be improved? Oversight of your biggest earning clients/tenants is important.
Yearly growth rate: Tracking the growth rate of your revenue year-on-year.
Client/tenant revenue analysis: Understanding which clients are bringing in the most revenue.
9. Keep on top of lease events
When are your leases due to expire? Are they on rolling leases, or set for a renewal? Do you have advance notice for upcoming rent reviews? A tenancy schedule, or automated system detailing this (and additional) information will help you to build an accurate picture of the tenancies and their terms.
Lease expiry tracking: Keeping track of when leases are due to expire.
Renewal management: Managing the renewal processes efficiently to maintain occupancy levels.
10. Reporting and Analysis
In the dynamically evolving landscape of Commercial Real Estate (CRE), reporting and analysis are pivotal. Live reporting ensures real-time tracking of task statuses, aiding in swift and informed decision-making. Meanwhile, advanced reporting offers an in-depth understanding of property and tenancy performances, helping stakeholders to align strategies with current market trends. Together, these tools foster transparency and efficiency, enhancing the profitability and value of portfolios through data-driven insights and strategic foresight.
Live reporting: Utilise live reporting features for real-time insights into task statuses.
Advanced reporting: Leveraging advanced reports to gain insights into property or tenancy performance.
Remember to constantly review and adjust your strategies based on these metrics to run a successful property management business. Reach out to one of our specialists at Re-Leased for a deeper understanding and effective monitoring of these KPIs. Click here to connect with a specialist today!
