Performing a health check on your property management business means taking a look at your leasing metrics to understand how well your business is doing. By conducting health checks regularly and staying up to date with your leasing metrics, you can understand how much money your business is spending/saving over time and make strategic adjustments accordingly.
This article will cover the importance of paying attention to your leasing metrics, how to calculate and organize your leasing metrics, and how much might be too much to spend on leasing.
We’ll start by understanding how often you should be taking a look at your leasing metrics.
How often should you perform a business health check?
First let’s cover how often you should be performing health checks on your property management business. At a minimum, you should be taking a look at your leasing metrics every quarter. Ideally, you’re checking your leasing metrics monthly.
The more often you do it, the better sense you’ll have of your business’s performance and the better prepared you’ll be to make important business decisions. This will help you save money in the long run, and hopefully find ways to make money!
What leasing metrics are part of your business health check?
The following list covers the important leasing metrics that you should be tracking quarterly, if not monthly:
- Number of active properties per month
- Number of inquiries per property per month
- Number of tours scheduled per property per month
- Number of leases signed per month
- Average days on market per property
Once you start tracking these specific metrics, you can then figure out helpful conversion rates using simple math. Conversion rates such as:
- Inquiry to tour conversion rate: (Number of tours scheduled per property per month divided by number of inquiries per property per month) x 100
- Tour to lease conversion rate: (Number of leases signed per month divided by number of tours scheduled per month) x 100
- Inquiry to lease conversion rate: (Number of leases signed per month divided by number of inquiries per month) x 100
You can even include other important metrics, such as your number of monthly website visitors and your website conversion rates to get a more holistic view of your entire leasing funnel.
Why is it important to track leasing metrics in your property management business?
The most important reason to track your leasing metrics is that you need to know where your money is going and how much time is being spent on certain parts of the leasing process. This will help you understand your ROI (return on investment), which should be used to inform your future business decisions.
If your goal is to not spend as much money (or time) for each property, ask yourself the following questions:
- What’s the value of your time? Assign a numerical value so you know how much that adds to the cost per property.
- How much time are you spending on tours, prospect communication, scheduling and follow-up? Multiply the value of your time by the number of hours you spend on the leasing process to further understand the cost of leasing.
- Is anything falling through the cracks? If guest cards are lost in a sea of emails, inquiries go unanswered, and calls/texts are missed, your properties could be spending more days on market than are necessary. That’s yet another cost to add to the overall cost of leasing.
How much should you spend on leasing?
Every business is different, so there is no one-size-fits-all answer to this question.
However, a good rule of thumb is if you’re spending more than half of the property’s first month’s rent on leasing, you might be spending too much - especially when you consider the cost of your time.
If you want to spend less on leasing, try using self-showing software and smart lockboxes! And if you don’t want to completely outsource your showings, you can use automated scheduling software and Showdigs’ handy “tour takeover” feature which allows you to show the property yourself for no additional charge.
Be sure to grab your copy of the Leasing Metrics Template so you can regularly conduct health checks for your business!