As a rental business owner, it’s important to be honest with yourself about your business’s health.
Further, you need specific measures of your business’s performance. Otherwise, it is difficult to tell what’s working in your rentals and what isn’t.
There are many kinds of data you can collect to help you assess how well your rentals are faring. For example, you can use digital analytics, numerical statistics, qualitative feedback, or website traffic to determine where your rental business can improve.
With the important metrics and factors narrowed down, you will find it much easier to make decisions that will impact the future of your business, including rent prices, priorities, and big projects.
Your goal should be to identify growth, regression, areas to improve, and actionable insights.
Below are some factors to consider as you evaluate your rental business’s performance.
Key Performance Indicators (KPIs)
Key Performance Indicators (KPIs) are metrics that provide insight about your business.
KPIs are critical for objectively evaluating your business. While each landlord has different priorities, here are a few to keep an eye on:
- Return on Investment (ROI)
- Website traffic (demographics, average time spent, popular pages)
- Conversion rate (percentage of visitors who take an action on your page)
- Occupancy/vacancy rates
- Average arrears
- Net income
- Turnover rate
- Repair and maintenance costs
Together, these KPIs can tell you how effective your website, advertisements, or renewal incentives are. They also help you decide where to focus your attention in the future. For instance, if you notice that your vacancy rates are particularly high, look at your turnover rates to see whether high turnover may be interfering with your occupancy goals.
Reviews and Ratings
Reviews sites are a great place to find qualitative feedback about your business.
Many popular listing sites (Zillow, Trulia, Realtor.com, etc.) also allow tenants to leave reviews. If you list your properties online, check these sites occasionally for new reviews and ratings.
If you aren’t getting reviews, encourage your tenants to leave them. Then, feature the best ones to continue the cycle of feedback. You might only have a few reviews at first, but before long, you will build a foundation of strong reviews for potential renters to browse.
In the meantime, use your reviews to assess what tenants like and dislike about your properties.
In addition to checking for online reviews, don’t be afraid to ask your current tenants for feedback directly. Eliciting feedback can be formal (an online survey you make and send to all your tenants) or informal (you ask a tenant what they think of your new policy or promotion in conversation).
For the former, encourage tenants to be honest by anonymizing your survey. You could also incentivize your survey by offering small prizes to those who complete it.
The major benefit to tenant feedback is that you can use what you learn to make changes while your current tenants are still around to experience the benefits.
How many tenants renew their leases, and for how long? Determining your renewal rate is your first step in assessing your tenant retention strategies.
For instance, let’s say your units are always filled and your rates are highly competitive, but you still experience a low renewal rate. What could be causing this? It could be something as simple as your strategy for renewals. Decide whether you ask early enough, reward loyal tenants, or advertise the benefits of renewing.
If renewals are still evasive, ask tenants who leave to cite their reason or motivation for moving. Their answers will give you further insight into your renewal rate.
Finally, turnover efficiency is a telling factor in your rental business’s success. How quickly and cheaply can you turn over a unit?
Every month a unit lies vacant is a month’s worth of rent revenue you lose. Organization and speed matter when it comes to cleaning, inspecting, repairing, and staging an empty unit. The more efficient you are during turnover, the faster you can move in a new tenant.
If your turnover efficiency is low, consider how you can minimize the time, work, and money you spend turning over units. For instance, you might decide to save or reuse materials and supplies, make basic repairs yourself, or prioritize inspecting earlier.
Evaluating Your Business
It can be tough to critically evaluate the business you dedicate so much hard work and energy. However, objectively assessing your rental business is obligatory for every landlord looking to improve. By tracking and evaluating your KPIs, reviews and ratings, tenant feedback, renewal rate, and turnover efficiency, you can turn your attention to where it matters for your business.