When you’re trying to establish and build wealth with your rental properties, it’s not enough to own them. You have to make sure they’re performing the way you expect them to. Understanding where you are with each property will help you make smart investment decisions. Don’t put your investment portfolio on auto pilot. While Columbus rental real estate can often be a great way to earn passive income, it shouldn’t be so passive that you’re not sure what you’re earning and what you’re losing on your properties.
As a professional Columbus property management company, we track some Key Performance Indicators (KPIs) that help us establish where we’re succeeding and where we’re challenged to do better.
Knowing the Numbers: Important Rental Metrics for your Properties
At Solutions for Real Estate, our team has been meeting virtually twice a week long before the pandemic required virtual meetings instead of in-person meetings. When we all get together, my staff knows that I’m going to ask a few key questions:
- How many units are we currently renting?
- What’s the occupancy rate?
- How many people are moving in?
- How many people are moving out?
- How many tenants have completed their lease terms and are going month to month?
Knowing where you stand will help you get a general performance snapshot. You need to know how many tenants are in place and who is coming and going. This will tell you what kind of rental income to expect and how many turnovers will need to be managed. You’ll have a sense of what’s being lost on vacancy. Make sure you know your numbers and you review them routinely.
Knowing the Finances: Your Money Matters
Once we know who is in place and who is moving and how many homes are vacant, the team turns our attention to finance. We look at delinquency rates. You need to know who is late paying rent, who is catching up, and who needs to be contacted. Take a look at the tenants who are routinely late and need to be served notices every month before they finally pay. These may not be the residents you want to renew at the end of the lease term.
It’s also important to look at maintenance costs. Sometimes our owners dip below their maintenance reserve. It’s important to get that reserve to a healthy number again because you never know what major repair is right around the corner. A sewer backup, for example, could take up all that reserve money and then include additional bills. Keeping your maintenance reserve healthy and well-funded will provide peace of mind.
Take a look at each individual property in terms of maintenance costs and financial needs, but get a view of the entire portfolio as well. A major rain event once caused 39 basements to flood, requiring our immediate response. In some cases, the damage was minor and easy to repair. In other cases, several feet of water led to mold and required that drains were snaked and basements cleaned up. You need to know if you’re going to call a handyman or a plumber, and you need to be prepared financially.
Holding Tenants Accountable
We review every maintenance invoice every week. It’s important to study the pricing and make sure it’s in line with the work that was provided. If there’s a recurring problem or something that seems outside of general maintenance work, we may have to look at the tenant. For example, if a toilet is continually backing up, you may want to find out why. We once had a $430 plumbing bill when a toilet had to be pulled. Our plumber found a child’s toy in the toilet. That’s going to be a tenant bill. This attention and accountability saves our owners money on maintenance.
These are some of our KPIs and yours may be different, depending on your investment goals and rental properties. If you’d like some help reviewing how your investments are performing or you’d like to talk about Columbus property management, please contact us at Solutions for Real Estate.