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

Gross Rent

Vacancy Rate

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)

Return-On-Investment (ROI)

Cashflow -> Critical!

Depreciation

Losses

• 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

Expenses

• Property Tax
• Repairs
  • Rent Ready
  • Damage
  • Wear & Tear
  • Capital improvement (Deduct over multiple years!)
• Insurance
• Utilities
• Lawn care
• Marketing
• Background checks
• Software
• 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

Applications received

Applications denied

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