Key Performance Indicators (KPIs) are a great way of measuring how well your Property Management team is performing. The problem many people have is deciding what they should be measuring. There is a risk of having too many KPIs so we are dealing here with the KPIs which are most commonly used by leading Property Management departments.
1. Revenue Growth: Many business owners would have a number of properties at the top. However, many people focus on door numbers and not the revenue that they bring in. Ultimately cashflow is what drives a business so revenue growth should be at the top of your list. Look for continued growth on previous years and focus on your management fee. This is the value of your business.
2. Occupancy: There is no point in having a property on your books if you cannot rent it. This again emphasises the focus should not be solely on how many properties you have. I have many rent rolls where the owners think they have more properties than they actually have. Spending a small amount of time focusing on the occupancy is required to get a true indication of the quality of your rent roll. Depending on your geographic region will influence the occupancy but in high urban locations this should exceed 95% for a month.
3. Arrears: High arrears is the first sign of a poor performing rent roll and potentially a property manager who is burning out and needs help. If more than 5% of your tenants are more than 7 days in arrears you have problems.
4. Properties Won: Clearly this is an important KPI as without properties coming in your rent roll retract. However focusing on quality rather than quantity should be the key for all rent roll growth. If your office has a Business Development Manager then part of their KPIs would be properties won.
5. Properties Lost: Most principal and business owner will put pressure on their team to get more management. However the measurement of the losses is equally important. In well established businesses it is not inconceivable to lose between 10% and 20% of your rent roll a year. Find out why you lose them.
6. Inspections: Make sure that you are actually doing what is stated on your authority to manage. If a Property Manager has 100 properties and inspects each property every 3 to 4 months they should inspect approximately 30 properties per month. If they are only doing half this amount you have to look at what they are doing.
7. Properties Let: This is similar to occupancy but has more of a focus on getting properties rented quickly. With the average length of tenancies extending to anywhere between 18 and 24 months lots of agencies are seeing a drop in letting fees. Focusing on getting properties rented quickly will help generate much needed revenue from letting fees.
8. Average Rent: For numerous reasons this is one of the most overlooked KPIs as Property Managers get busy on other tasks, they often forget to review rents. Easy money is made for your business and your owners through regular rent reviews.
9. Management Fee: There is no point in having a large rent roll if the fees you charge make it unprofitable. Try not to discount your fee when going after new business as you are discounting the value of your business. Look to add value instead.
10. Customer Satisfaction: Have you ever surveyed your client base and do you really know what they think about you? Measuring customer satisfaction is vital to knowing how well you are doing. Although this could be a painful exercise to do at the time the long term effects in not measuring this could be terminal for your business.