What Key Performance Indicators should I track for my rental?
As a Landlord or rental property investor, you want to keep track of how your rental is performing, but how exactly do I do that? And what are the best Key Performance Indicators?
When you own one property you probably don’t worry too much about most of these metrics, but when you are a serious investor owning multiple properties it is important that you understand how long it takes to place a new Tenant, to complete a repair, or why people leave for example.
You can divide these KPI’s up into two groups. 1. Financial Key Performance Indicators and 2. Operational Key Performance Indicators.
Below a list of Key Performance Indicators you should consider using for your investment business:
Financial Key Performance Indicators
Profit Margin – (Rent income – Expenses)/Rent income
Average rent per square foot – Total rent roll / total square feet rented
Average rent increase
Cost to Turn – Average cost to get a unit rent ready
Repair/unit/month – Average Maintenance and Repair costs for all units per month
Cash on Cash Return (COC)
Cashflow -> Critical!
- Vacancy Loss $ – Time no rent income because the property is vacant
- Delinquency Loss $ – Tenants who do not pay
- Eviction Loss $ – Tenants evicted causing a vacancy and legal expense
- Property Tax
- Rent Ready
- Wear & Tear
- Capital improvement (Deduct over multiple years!)
- Lawn care
- Background checks
- Legal & Accounting Expense
- Property Management Fees
- Mortgage interest (Principal payment is considered profit!)
Operational Key Performance Indicators
% Successful renewals – It is more profitable to keep an existing Tenant because there is no vacancy, no marketing and no rent ready repairs.
Average rent increase on renewal
Rent increase new Tenants – increase for new Tenants compared to previous Tenant
Percent of Applications approved
Average days to process Applications
Why do Tenants leave?
- Renting a different size unit
- Moving to a different type unit, like apartment or house
- Moving out of state
- Buying a house
% of Tenants that break the lease
Delinquency Rate -Percentage of Tenants late on their rent payment
Average Days late on rent payment
Eviction Rate – Percentage of Tenants being evicted
# of Units Terminated Number of units ending their lease either voluntary or evicted
Days on Market – Days the property is on the market from the day marketing started
Days Vacant – Average Days the property is vacant from the date the previous Tenant moved out
Workorder (WO) Entered – Number of repair work orders entered
Completed WO – Number of repair work orders completed
Days to Complete WO – Average days it took to complete work orders this month
WO – Days to Repair – Average Days it took to get the repair completed
Average Days to Estimate WO – Average Days it took to get the estimates in
WO – Days to Rent Ready – Average Days it took to get the unit rent ready
Tenancy duration – Average Time Tenants stay in property