As a rental property owner, you make a lot of decisions in any given year.
Repairs, vacancies, renewals, renovations, and tenant screening keep you on your toes as you try to determine what’s right for your business.
The good news is you don’t have to trust your luck or your gut to make these decisions. Data can lead you in the most lucrative directions for future success.
Key Performance Indicators (KPIs), website analytics, and survey results are three ways to gather insights from the data you collect about your rental businesses’ productivity and effectiveness.
Here is a brief overview of three ways to collect data in your rental business and how each can minimize risk in everyday decision-making.
Key Performance Indicators (KPIs)
Key performance indicators are metrics that help you evaluate your business over time. They include your lead-to-lead conversion rate, occupancy and vacancy rates, net income, and others.
Remember that many KPIs are automatically generated and tracked by your property management accounting software. If you’re looking to investigate recent trends in data, log onto your property management software account or ask a customer service representative where you can find the information you’re looking for.
Here are a few KPIs that help the most in your rental decision-making process.
Lead-to-Lease Conversion Rate
Lead-to-lease conversion rate is a percentage that describes how many qualified leads lead to signed leases in any given period. A healthy lead-to-lease conversion rate means that tenants who express initial interest in your properties tend to ultimately choose your properties.
A low or decreasing lead-to-lease conversion rate might mean there’s a disconnect with your rental advertising or applicant pipeline. For instance, let’s say your ads are unclear about whether you allow pets. If many pet owners are interested in your properties and later find out that you don’t allow them, they will not become renters.
If you don’t realize that it’s the reason for low conversion rates, you might make expensive renovations, redesign your entire marketing strategy, or try other ineffective changes. Instead, you just need to clarify your pet rules. Your conversion rates will improve as fewer pet owners become leads.
It’s always a good idea to track your rental expenses. Not only will this information prove useful for deciding which tax deductions you qualify for, but a list of expenses and averages can also help you decide where to focus your finances in the future.
For example, let’s say turnover involves cleaning, repairs, painting, renovations, other maintenance, and tenant screening fees. If these costs put you in a deficit, consider whether you need to modify your lease renewal strategies or introduce some incentives so you can avoid future tenant turnover.
Your company website is an integral part of your business’s digital presence. While social media accounts are useful for attracting attention, a seriously interested renter will ultimately land on your company website. That’s why your site is one of the best places to garner insight into your applicant pipeline and user experience.
For instance, your website analytics can tell you what pages are most popular, how long the average user spends on a specific page (or your website as a whole), as well as the average number of pages a user clicks per session.
If you have a customer support chatbot, this tool can also tell you the most frequent questions your website visitors ask.
Each of these metrics can illuminate whether your website is doing its job properly. Are prospects finding the right information? Are their questions being answered, or do they leave too quickly? What about key information, like unit features and pricing? Are visitors finding these pages, or are they too hidden?
Answering each of these questions helps you decide how to organize and improve your website.
Tenant Feedback Surveys
Tenant feedback is an understated part of data analysis. If you’re deciding which goals to establish for your rental business in the coming year, tenant feedback is a great place to start. Feedback allows you to determine what tenants like about their experience, what needs improvement, and what may be causing them to move out.
For example, tenants may be generally unsatisfied with your level of communication but not enough to express their concerns directly. An anonymous survey might be the perfect opportunity for your tenants to indicate this concern. If you review this feedback later and discover that 75% of your tenants agree, you know exactly how to improve your renter experience.
Understanding Datafication in Real Estate
In today’s real estate industry, everything is data. Even informal observations can be recorded and tracked over time to help you make decisions for the long-term goals of your rental business. By investigating KPIs, website analytics, and tenant feedback, you are certain to make the right choices for your rental business’s future.