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track rental property performance

How To Track Rental Property Performance for Maximum Success

Posted on December 5, 2022

If you’re a rental property owner or manager, it’s important to track the performance of your properties. By doing so, you can identify potential issues early on and take steps to address them. Additionally, tracking rental property performance can help you make informed decisions about pricing, marketing, and other aspects of your business.

3 Key Rental Property Metrics To Monitor

There are a number of ways to track rental property performance. Below are three of the most important metrics to keep an eye on.

1. Occupancy rate

This is the percentage of units that are rented out at any given time. A high occupancy rate is generally indicative of a healthy rental market. To calculate your occupancy rate, simply divide the number of units that are rented by the total number of units in your portfolio.

2. Cash flow

This is the money that’s left over after you’ve paid all of your expenses (e.g., mortgage, insurance, taxes, repairs/maintenance). Positive cash flow indicates that your rental property is profitable; negative cash flow indicates that it isn’t. To calculate your cash flow, simply subtract your total expenses from your total income.

3. Return on investment (ROI)

This is a measure of profitability that takes into account both cash flow and the upfront costs of acquiring and renovating a property. To calculate ROI, divide your annual net operating income by your total investment (i.e., purchase price plus renovation costs).

Benefits of Tracking Rental Property Performance

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As a rental property owner, it is important to understand the benefits of tracking your property’s performance. Doing so can help you make informed decisions about your investment, and ultimately, maximize your return on investment. Here are three key benefits of tracking your rental property performance:

1. You’ll be able to identify trends over time

When you track your rental property performance, you’ll be able to identify trends over time. This information can be helpful in a number of ways.

For example, if you notice that vacancies have been increasing steadily over the past six months, you may want to consider making some changes to your marketing strategy. On the other hand, if you see that rents have been increasing steadily, you may want to raise your rents accordingly.

Either way, trend data can be extremely helpful in making decisions about your rental property.

2. You can benchmark against other properties

Another benefit of tracking your rental property performance is that you can benchmark against other properties. This data can be extremely helpful in a number of ways.

For example, if you see that your vacancy rate is higher than average, you may want to consider making some changes to your marketing strategy or doing some additional research on the best way to fill vacancies. On the other hand, if you see that your rents are lower than average, you may want to consider raising your rents or investigating why this is the case.

In either case, benchmarking data can be extremely helpful in making decisions about your rental property.

3. You’ll have a better understanding of your expenses

Photo by Katie Harp on Unsplash

Finally, when you track your rental property performance, you’ll have a better understanding of your expenses. This information can be helpful in a number of ways.

For example, if you see that your repair and maintenance costs have been increasing steadily over time, you may want to consider changing how often you schedule repairs or performing preventative maintenance on a more regular basis.

On the other hand, if you see that your utility costs have been increasing steadily over time, you may want to investigate ways to reduce these costs. In either case, having a clear understanding of your expenses can be helpful in making decisions about your rental property.

Conclusion

Photo by TheStandingDesk on Unsplash

Tracking your rental property’s performance offers a number of benefits that can help you make informed decisions about your investment and ultimately maximize your return on investment. By tracking trends over time, benchmarking against other properties, and understanding your expenses, you’ll be in a much better position to make decisions about how to best manage your rental property.


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Content created by J. Scott Digital freelance copywriting services. Featured photo by LinkedIn Sales Solutions on Unsplash. This blog post is available for purchase and re-use as a limited-edition NFT on Mirror.xyz

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Basic Property Management provides owners and managers of rental property with the tips, tools, and techniques they need to be successful. We provide articles on a variety of topics, including how to find and screen tenants, how to negotiate leases, and how to handle repairs and maintenance. We also offer a directory of property management services and resources, so you can find everything you need in one place.

Residential

Residential real estate property management is the process of overseeing and renting out residential properties. This type of property management is different from commercial property management in a few key ways. First, residential properties are usually smaller in scale than commercial properties. Additionally, residential property managers typically work with individual tenants rather than with businesses. Finally, the leasing terms for residential rentals are usually shorter than those for commercial rentals. As a result, residential property managers must be skilled at handling a variety of tasks, from marketing and advertising vacant units to collecting rent and dealing with maintenance issues.

Commercial

Commercial real estate property management is different from residential property management in a few key ways. For one, commercial properties tend to be much larger than residential ones, so the management team has to be able to handle a larger volume of tenants. Additionally, commercial leases are usually much longer than residential leases, so the manager needs to be prepared for a longer-term commitment. Finally, commercial properties tend to have more complex financial arrangements and regulations that need to be followed. As a result, it takes a different set of skills and knowledge to effectively manage a commercial property.

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