5 Key Metrics Property Managers Need to Know
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Your clients may be the most important aspect of your property management business, but if you don't track your company's activity and performance against your expectations, you'll lose out on valuable data that can help drive your company's growth.
If you're wondering "how to get more property management clients," these five metrics from a property management coach outlined in this article will help provide a better understanding of what needs to improve for you to add more doors and maintain loyal customers.
1. Client Acquisition Costs
Knowing the costs associated with acquiring new clients is very helpful for determining if your marketing efforts are profitable. Client Acquisition Costs (CAC) is calculated by dividing how much it costs to sign a new property owner and their doors by the number of new clients acquired over a certain period of time.
This ratio is helpful to determine how profitable it is for your business to attract more property owners. If the number stays high, then this means that either your marketing costs are too high or that you're struggling to find ways to retain customers.
2. Marketing Costs
Marketing is an important part of any business, and property managers are no exception. However, the effectiveness of your marketing efforts can be measured by how much it costs to acquire new clients and how far your marketing budget goes toward growth.
While this metric is closely associated with Client Acquisition Costs, analyzing your marketing spend should go a bit deeper toward understanding the overall effectiveness of your marketing strategies. It's helpful to track how many leads are generated from different marketing channels so you can focus your efforts on the most profitable ones.
A property management coach can tell you that generating new leads is a critical, never-ending aspect of building and maintaining a successful property management company! Make sure your marketing costs support a strategic plan that delivers quality leads for your market.
3. Labor Efficiency
Labor Efficiency is defined as how many doors per employee can be managed at any given time. This metric measures how well you utilize your employees by showing the workload each employee can manage. Since labor costs are one of the highest expenses for residential property managers, it's important to know how to get the most out of your team.
If you're not sure how to calculate this metric, a property management coach can help! Maintaining an efficient labor force is critical to managing more doors and long-term success. Working with a property management consultant is one of the best ways to optimize processes and technology to help your employees before more efficient and productive!
4. Management Fees
As you know, management fees for residential property management companies are a percentage of collected rents for their time and efforts in managing tenant communications, monthly rent collection, lease renewals, and other aspects of operating rental properties. Keeping an eye on this metric can help you set realistic goals and expectations for your business.
If you're not charging enough for your services, your property management company will struggle to grow. Being the lowest-priced property manager in your market might help you gain some business, but it won't sustain your operations or profitability for very long.
Attracting quality employees and dominating your market requires competitive pricing that allows you to offer good salaries and quality services to renters and property owners.
5. Profit Margins
This metric goes hand-in-hand with your property management fees. Profit margins measure how much profit is generated from each dollar of sales. This calculation is done by dividing net income (total revenue minus total expenses) by total revenue. With the right balance of appropriate fees and well-managed expenses, profit margins should support property management business growth!
When setting prices for services, it's important to know what your margins should be to maintain or increase your profits. If profit margins are too low, you might need to reconsider your pricing strategy.
Remember: increasing prices without optimizing processes, property management software, and team productivity can still negatively impact profit margins (and create unhappy clients). Rates should be reviewed regularly, but make sure an increase to your property management fees isn't a band-aid to cover up poor efficiency and lackluster team performance.
Master These Metrics With a Property Management Consultant!
If you're a residential management professional who has grown to own your own company, it can be hard to master the skills required for the business side of things. The best way to learn is through experience and expert help! Property management consulting services can help quickly fill in gaps in knowledge or skill sets, so you focus on growing your revenue instead.
Real-Time Consulting Services specializes in helping owners with all aspects of their property management industry careers, from strategy development to financial planning, operations analysis, employee training, and process optimization. We want our clients focused on doing what they do best while we take care of the rest! Learn more about how we can help you understand and analyze the metrics we talked about today. Schedule a free consultation!
Ready to analyze some metrics? Use our free tool to Calculate Your Profit Per Door!