Data Insights That Boost Productivity in Your Rental Business

0
234
man

Data is the best place to start when making critical decisions about your rental business. 

If you don’t know where your business currently stands with leads, occupancy rates, and expenses, it’s impossible to make accurate predictions about future directions or growth.

Thankfully, many of the key datapoints you need to evaluate your business can be found in property management software. If you use property management accounting software, look for your KPIs (Key Performance Indicators) to learn about where your business is excelling and what needs improvement.

You can also use your company website analytics to analyze site traffic and identify new leads.

Here are a few ways to analyze data from your KPIs and leverage that knowledge to boost productivity in your rental business. 

Lead-to-Lease Conversion Rate

Your lead-to-lease conversation rate is a percentage that represents the number of qualified leads that lead to signed leases out of the total amount of starting leads. This metric is incredibly useful for evaluating the productivity of your business’s applicant pipeline.

If your pipeline isn’t very productive (i.e., you have a low lead-to-lease conversion rate), this might mean that you aren’t reaching out to leads often enough or at the right times. Consider adding an automated messaging system to follow up with leads.

Turnover Expenses

Tenant turnover is an expensive process. It can cost anywhere from hundreds to thousands of dollars to cover renovation and repair costs, cleaning, new furniture, paint, or other supplies. You’ll also have to pay to screen a new tenant before you can fill the vacancy.

Keep track of how much money you spend on turnover over several years. If your average cost per turnover is a significant portion of your annual budget, consider whether you might be overspending.

Tracking turnover expenses is also helpful come tax season. There are many deductions for rental repairs that can save you money. Improvements and renovations cannot be deducted in a single tax year and must be depreciated over several years, but these too can save you money in the long run.

Occupancy/Vacancy Rates

Occupancy and vacancy rates indicate what percentage of your units are occupied from year to year. This metric can help you calculate how much revenue you lost to vacancies over a designated time and how long tenants tend to stay.

Occupancy and vacancy rates can be influenced by rental market trends, unemployment, economic recessions, and location. Tracking this data over time can help you realize where to focus your resources to reduce tenant turnover and increase productivity in filling units.

Tenant Satisfaction

One often overlooked source of data in real estate is your tenants themselves. Tenants’ opinions and feedback are essential for realizing why you aren’t getting leads or renewals.

At least once a year, ask tenants for anonymous feedback. Pay attention to the things tenants appreciate about their rental experience and what they wish was different. This qualitative data can tell you whether it’s more productive to focus on repairs and renovations or if tenants are generally happy with amenities and simply want better communication or resident events to attend.

Once you’ve analyzed qualitative data, it might be useful to also collect quantitative data. For instance, ask tenants to rate their rental experience (or the specific parts you’re interested in) out of ten. Over time, you can follow the trends, calculate averages, and justify new expenses with numerical data to prove it will improve your business.

Net Income

Net income is the metric you are most likely to already be tracking. Your total revenue growth over time is an important KPI that gives you the big picture of how well your rental business is fairing compared to your competitors.

You’ll also need net revenue to calculate whether certain tax deductions and safe harbor rules apply to your business. Keep this KPI handy, whether you find it on a digital accounting platform like QuickBooks or keep track of it yourself.

Using Data Analytics to Make Productive Decisions

Not every decision you make in your rental business will ultimately be lucrative. Sometimes trying something new doesn’t work, and that’s okay. But monitoring key metrics like these can help you make the “right” decision more often than not. When it comes to productivity, it pays to have all the information you can about your business to sustain and improve its future. 

click here more