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The Key Metrics Every Landlord Should Track Regularly

key metrics

As a landlord, closely tracking key metrics provides insight into performance, opportunities for improvement and risks developing into major problems if left unaddressed. Regular review of metrics helps determine what’s working, where sales, operations or management can be enhanced and whether current strategies continue leading towards important business goals or require adjustment.

Occupancy rate. The percentage of units occupied and collecting rent represents the most fundamental metric for any real estate investment business. Aim for maximum occupancy while still maintaining suitable vacancies to accommodate move-ins and flexibility in ended tenancies. Track occupancy at both the overall portfolio level as well as individually for each property. Look for any undesirable trends or seasonal patterns indicating needs for change. Fix or remove any areas of mediocre or poor performance impacting business results.

Average rent amount. The average rent collected across all occupied units shows progress over time relative to market rates, inflation and raising remaining below-market leases to market value. Higher rents mean greater revenue, cash flow and overall business valuation without needing additional units filled. However, also consider rent increases relative to local inflation and cost of living to ensure resonating desirability without price gouging loyal tenants. Rent amounts should trend up over long periods with occasional, moderate increases rather than constant bursts demanding unsustainable changes.

Revenue growth. Track how much revenue gets generated each month and year over year compared to the previous period. Aim for consistent growth through things like average rent increases, reduced vacancy, expanding numbers of units rented and new units or properties acquired. Stagnant or decreasing revenue suggests underperformance needing correction through strategic business decisions. Revenue growth determines ability to fund expenses, build wealth, improve properties, expand service offerings and remain competitive in the marketplace. It proves essential to prosperity and sustainability.

Expense ratios. Key metrics include expenses as a percentage of revenue, controllable expenses vs. non-controllable costs and Year over Year expense increases. Lower ratios mean greater profits and cash flow available for important business priorities. Controllable expenses provide room to cut costs if revenue gets impacted while non-controllable expenses represent fixed costs unable to adjust down in proportion. Ensure expenses only increase moderately year over year rather than disproportionately outpacing revenue growth and potentially profit margins over time. Expense management determines how much of each dollar collected contributes to building value through wealth and assets rather than non-essential spending.

Cash reserves. An important cash reserve provides working capital, emergency funds and financial security during difficult economic times. Most experts recommend setting aside at least 6-12 months of expenses in reserve. Look at historic expenses to determine an ideal, prudent balance. While setting money aside depletes immediate cash flow and profits, lack of reserve threatens business survival. Track reserve monthly and make replenishing it a priority if noteworthy amounts get spent down for any reason. Unforeseen circumstances happen—adequate reserves ensure preparedness, flexibility and stability through challenges as well as opportunities.

In summary, consistent review and analysis of key metrics provides essential insight into real estate investment business performance and risks to avoid potential problems left unaddressed. Regular metric tracking helps determine what’s working, where improvements can enhance results and whether strategies continue leading towards important goals or require adjustment.

The metrics every landlord should track regularly include:

Occupancy rate – Aim for maximum occupancy with suitable vacancies. Track at portfolio and property levels. Fix or remove underperformance impacting results.

Average rent amount – Higher rents mean greater revenue and value. Ensure increases relative to local costs of living and inflation. Trends of consistent growth rather than constant big leaps expected.

Revenue growth – Revenue growth determines ability to fund everything to expand impact. Stagnation requires strategic correction through decisions growing revenue.

Expense ratios – Lower ratios mean more profit and cash flow for priorities. Controllable vs. non-controllable expenses. Manage moderate year over year increases rather than outpacing revenue growth.

Cash reserves – Aim for at least 6-12 months of expenses as reserves. Meet historic expenses to determine an ideal balance. Make replenishing reserves a priority if spending significantly depletes them for any reason. Preparedness and flexibility require adequate reserves through difficulties as well as opportunities.

Success starts with determining what gets measured and assessed. What proves meaningful depends on business objectives and the resources available to work towards them. The metrics chosen give insight into performance, influences progress and identifies not just accomplishment but the means through which continuous improvement becomes feasible and prosperity achievable. Discipline and adaptability walk hand in hand through perpetual refinement according actual results rather than promises or perceptions alone. Wealth builds through comprehension of how far ventures have come rather more so than where they’re perceived as ranking relative to others at any given time. Standalone results stand the test of time far more than speculation reputation alone.

The truth of progress gets told in numbers and key metrics provide that truthful assessment supporting movement tailored progressive growth and sustainable success. Progress gets concrete. Potential proves provable. Accountability gives control. And with control come results. Numbers expose the foundation on which success actually gets built as well as maintained for the long haul rather than hype or popularity momentarily. Progress over perception prevails through metrics and keeps important journey milestones on full display as a well-laid strategic roadmap. The important milestones get hit when guided by metrics instead of guesswork or constantly chasing whatever seems most exciting or pressing at a particular moment in time. Getting to impact starts with determining what to measure and analyze consistently as a result. Key metrics lead to insights supporting a prosperous, purposeful pursuit of meaningful success and freedom through real results over allure or aspiration alone. Truth provides power. And the truth gets told through metrics well tracked over the long run.

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