Top 8 KPIs Every Multifamily Investor Should Understand

Multifamily asset managers use key performance indicators such as expense ratios, occupancy rates, and leasing conversions to track the performance of the investment properties they oversee. Learning about these metrics can also help multifamily investors select better-performing assets, grow their portfolios more efficiently, and understand the general market trends.

When measuring the progress of an investment, multifamily asset managers use a number of key performance indicators, or KPIs. These high-level quantitative metrics serve as a compass for determining whether a property’s performance is in line with projections. Asset managers can use this data to optimize operations and to, ultimately, improve the outcome of the investment cycle. Multifamily investors that want to truly understand their assets’ performance and the driving reasons behind it should also familiarize themselves with the KPIs in the list below.

Key Performance Indicators for Real Estate Asset Management

Revenue Growth – Income generated by rent increases, or the addition of new amenities and services offered to the tenants. A good asset manager should always be on the lookout for new opportunities arising from daily operations and the latest market trends in apartment living.

Expense Ratio – The percentage of income that goes towards the property’s operating expenses. Expense Ratios differ from property to property, and market to market.

Delinquency – This indicator shows the percentage of tenants that owe back rent or other fees. Your asset management team should have a plan of action for collecting delinquent payments.

Occupancy Rate – The percentage of units that are rented. This indicator is directly related to the income generated by the property – fewer vacant apartments mean higher income. The occupancy rate can be impacted by a number of factors including the condition and location of the complex, the experience of the asset management team and its marketing strategy for the property.

Turnover Time – This is the period between one tenant moving out and another one renting the same apartment. The unit generates no rent income during turnover, thus impacting negatively the operating income of the property.

Leasing Conversions – This indicator measures the number of incoming leads and how many move successfully through the marketing funnel to become appointments, showings, applications, and signed leases.

Renewal Rate – The percentage of existing tenants that choose to renew their lease for another term. This metric can be used to gauge resident satisfaction and how rental rates compare against similar properties.

Profit and Loss – The profit and loss (or Income Statement) summarizes the actual expenses and income of the property. Monitoring monthly variances against the budgeted numbers for each line item can help asset managers spot opportunities for revenue growth and expense cuts.

Reviewing these indicators on a regular basis will help you ensure the property you invested in is managed well and will continue delivering positive gains.

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