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Real Estate Key Performance Indicators
As a sophisticated real estate manager, you need to be well-aware of information relating to tenancy, financial performance and maintenance of your assets in order to make decisions and ensure the sustainability of your property.
Whether you are an individual real estate agent, an agency or a landlord investing in real estates, setting and measuring KPIs (Key Performance Indicators) is an important step re-evaluating past actions, setting the future course and re-adjusting them as required.
KPIs serve as benchmarks against which progress in cost and time efficiency can be measured to methodically improve organizational performance.
Considerations for Setting KPIs
KPIs may be industry-standard giving competitive edge or organization-specific to improve processes and organizational bottom lines.
Size and structure, lifecycle stage, and other value-addition factors including environmental and safety measures, play an important role in determining what KPIs you should incorporate. Real estate KPIs should ideally be consistent year on year, so it can serve as a reliable management gauge.
Common KPIs in the Real Estate include generic industry-neutral factors such as conversion rates, occupancy and other operational aspects that must be analyzed and improved, with each department defining its own set of metrics to measure progress or the lack thereof. Some KPIs specific to real estate can help achieve sustainable and scalable growth.
Real Estate KPIs for Valuable and Actionable Performance Data
1. Qualified Lead Generation and scheduled follow ups
Cultivating leads via a well-designed funnel can amount to a useful real estate KPI. Lead generation not just means prospects within reach for your current inventory of properties, but it also avails you a database of people in various stages of the customer journey whom you should follow up regularly to stay on top of mind.
When your inventory expands to suit their requirements or they progress to a better state of purchasing or leasing real estate, the relationship you build with them will give you an edge over competitors, even if you could not close a deal immediately.
2. Tenant Turnover
A replacement tenant can be over twice as costly than renewing a lease. It is therefore essential to track tenant turnover to measure the sustainability of your business.
Depending on your location, spatial capacity and so on, an average tenant turnover below 12 to 24 months makes it necessary to identify the reasons for the low rates..
Rents above market-standard, poor maintenance and inadequate footfall are few basic considerations. Address these issues with urgency to ascertain your property’s credibility and attractiveness.
Making this KPI accessible to managers of your various departments will be a motivating element for your teams (marketing, project management, maintenance, etc) to maintain a low turnover rate.
3. Maintenance and Sustainability KPIs
Maintenance and repairs represent a big part of your property management total budget.
Tracking this KPI regularly can save you a chunk of costs. Indeed, this allows you to put in place a useful process to deploy contractors, report maintenance problems, and make payments.
At a time of increased environmental consciousness, KPIs are also playing an important role in helping organizations become increasingly environmentally sustainable.
A well-planned plan in this category can deliver up to a 20% savings on certain operational costs as well as aid in compliance.
It is important to opt for a meaningful ratio or data point as a basis for a valid KPI and change them with evolving corporate context to drive results in support of an organization’s strategic goals.