KPIs or Key Performance Indicators are the backbone to any successful business. KPIs are a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. As apartment operators, you too should have specific KPIs to track and measure the trends and performance of your property. Along with KPIs you should also have other systems or Standard Operating Procedures (SOPs) in place to hold your business accountable and to stay consistent.
1. Property Visits
• You must visit your properties and check in on the renovations, projects and overall condition of the property. We currently visit our properties every other week until the major work has been completed and once stabilized we visit once per month (and we do not live in our market). The devil is in the details and if you are not there seeing it for yourself, then you will not know the quality of the work being done. Pictures are not enough and can be taken at certain angles or doctored. We also suggest walking all vacant units and units under renovation, you never know what you are going to find or a talking point that comes up because of it.
2. Weekly Calls with Weekly Reports
• What reports are you receiving on a weekly basis? We receive a weekly comparison to budget, updated rent roll, updated project list, interior renovations update, snapshot of vacant units, notices to vacate, renovated units along with a weekly report which includes things like occupancy, pre-leased units, traffic counts and conversions, vacant units rented and not rented, move ins & outs, ready units vs. down units, delinquent counts and $ amount, promise to pays, lease expirations, notice to vacates, work orders received and completed, month to date total income received, reasons for cancels, denials and move outs, and any misc. information like large repairs, suggestions, etc. Suffice to say you should be receiving a lot of information from your property management company in order to track the performance of the property.
3. Access to their Property Management Software
• The reports mentioned above are typically pulled by a property management software that your management company uses. These weekly reports are just snapshots of what is going on, you should also have access to this software to view up to date and daily statistics. This allows us to look at the reports and statistics mentioned in the weekly reports but in more detail. These include a deeper dive into potential residents, the sources these leads come by, work status of residents, lead pipeline, etc. Being able to look at these report allows you to see trends and get a feel for the flow of traffic. Looking at a weekly report is great but when you look day over day you are able to identify more opportunities.
4. Monthly Reports
• How detailed are your monthly reports? Are you only looking at the income statement which is just a summary of your monthly income and expenses? If this is all you are looking at or getting from your property manager then you’re not digging in deep enough. Our reports are 200+ pages and include each and every payment and expense along with proof of payments from our property management company among many other things. (See the next page for a snapshot of what we receive in our monthly reporting).
Here is the Index page of our monthly report where you can see all of the items included in the report that we review.
5. Audit your Financials Monthly
• Not only should you be receiving these detailed reports, but you should also be auditing them, which means reading through them to look for errors, inconsistencies and anything else that sticks out. We once found a $10k charge for a plumbing expense that was not for our property, and had we not looked we would have been responsible for this expense as it was not found by our manager. Do not make the mistake of only looking at line items that are over budget, there have been many times when the summary income statement looked fine but after digging into the General Ledger we have found expenses that were either double charged, coded incorrectly or were not supposed to be there. Property management companies have multiple properties they manage, and their accountants are in charge of multiple properties, so there can be mistakes made. You need to be a second set of eyes and question charges that look to be out of place and/or unexpected. If you are new to looking at a report like this, then you may want someone on your team with this experience. If you can’t afford someone on your team then you will need to dedicate the time and energy of knowing these reports very well and over time you will improve.
6. LASAL (Leads, Appointments, Showings, Applications, Leases)
• This is something we learned from our friend and mentor Neal Bawa. Not only do you want to know the sources of where leads are coming from and how many of each you are getting on a daily, weekly and monthly basis, but you also want to track the conversion of each of these into the next so you can identify bottlenecks and what needs improvement. Imagine only knowing that you had 30 leads last week and you have 2 leases signed. In this scenario, it’s difficult to really know what the issue is other than the conversion % was low. But what if you knew that of those 30 leads, there were 5 appointments booked, and of those appointments there were 3 showings and of those showings there were 2 applications and of those applications there were 2 leases. Now you know that somewhere between the leads and appointments there is something creating a low conversion rate. Maybe the leads are not quality leads, or the property management company is not getting to those leads quick enough. Regardless, you have identified the area of the bottleneck and now you can dig in further to investigate instead of just guessing. We have our manager provide us an update on this weekly and we track this week over week and month over month to see if we are improving in each of these areas.
• This also holds the property manager accountable while training them to improve in this area. Each market and class of property is different so it is tough to have a specific rule of thumb you should be seeing here, which is why it’s important to not only track this weekly but month over month to identify what is a good performance vs. a bad performance.
7. Customized Reporting
• As you add more properties to your portfolio and become a better operator you may want to start customizing your reports to track even more trends and KPIs. You may also want to track the performance of your entire portfolio vs. a specific property. There are tools out there that allow you to create dashboards where this information can be pulled for you whenever you like. We use a tool called Tableau and are emailed a daily snapshot on the performance of our individual properties and our entire portfolio so we can identify trends and constantly improve on our properties performance.
“ Action without planning is the cause of every failure “