Are you ready to take your business to the next level? In the world of property management, success isn’t just about managing properties; it’s about managing your bottom line too! In this blog post, we’ll be your financial tour guides, sharing five essential metrics you need to track to make your property management business profitable. Let’s dive in and crunch those numbers!
Five Metrics to Track for a Thriving Property Management Business:
- Occupancy Rate
- Rent Collection Rate
- Maintenance Costs
- Revenue per Unit (RPU)
- Return on Investment (ROI)
Picture this: A full house, buzzing with happy tenants and the sweet sound of rent checks hitting your account! That’s what a high occupancy rate brings. Calculate your occupancy rate by dividing the number of rented units by the total number of units and multiply by 100. Aim for a rate of 95% or higher. Show those empty units the door and say hello to a profitable property management business!
According to a recent study, 68% of renters decide to leave because of poor customer service and only 9% leave for competitive pricing in other communities. Keep your Occupancy Rate on track, by consistently delivering to your residents longings.
Rent Collection Rate
Collecting rent on time is like scoring a slam dunk at the buzzer—victory is sweet! Keep a close eye on your rent collection rate, which measures the percentage of rent collected on time. Set up clear payment policies, offer convenient payment options, and send friendly reminders. Remember, a high rent collection rate means a healthy cash flow and fewer sleepless nights!
Overcome rent collection challenges by seeking advice from peers and exploring informative blogs. Try adapting their tips to your specific needs, experimenting with different strategies to find what works best for your property management business. Embrace the power of shared wisdom to streamline rent collection and ensure your business thrives. 🔑💼💪
Maintenance is the heart and soul of property management—a little attention goes a long way! But it’s crucial to keep an eye on those maintenance costs to prevent them from breaking the bank. Track your expenses on repairs, upkeep, and preventative maintenance. Is there a particular unit that drains your budget like a leaky faucet? Identify trends and find ways to reduce costs without compromising tenant satisfaction.
This is why it’s so important to have a solid emergency maintenance plan. You can download our comprehensive guide on that here. Your wallet will thank you!
Revenue per Unit (RPU)
The golden benchmark of the property management world! RPU is all about the average income each of your units brings in, and it’s your secret sauce for financial success. To calculate RPU, simply divide the total revenue generated by the number of units you manage. While the average healthy RPU can vary depending on various factors, including location and property type, aiming for an RPU that accounts for around 8% to 10% of the property’s gross income is generally considered a good target.
If your numbers are not adding up, it’s probably time to look into a Resident Benefit Package. Resident Benefit Packages have grown in popularity in the single family space in recent years for their ability to increase RPU for the property manager, as well as the overall living experience for the resident.
Return on Investment (ROI)
The ultimate metric that ties it all together—ROI!
Tracking your ROI helps you determine if your efforts are paying off. Calculate it by subtracting your total costs from your total revenue and dividing the result by your total costs.
A positive ROI indicates a profitable business, while a negative ROI signals a need for some financial course correction.
There are many ways to pad your margins if you are unsatisfied with your ROI, you might just need to take a hard look at your business and decide which one works best for you.
Armed with these five essential metrics, you’re ready to take charge and steer your property management business toward profitability. Remember, tracking these numbers isn’t just about geeking out on spreadsheets—it’s about making strategic decisions, optimizing operations, and keeping those rental revenues flowing like a serene waterfall!
If you’re ready to start increasing your profitability while improving your resident experience, click here to request a demo and learn more about how Latchel can help you achieve this.
Hungry for more? Learn more about how you can create an anti-fragile property management business and thrive through the unknown. Click here to download our Free Ebook!