Every visionary CEO's to-do list contains tracking leasing and marketing KPIs that are crucial for their business. But is it paying off well? Even after calculating KPIs each quarter, some companies struggle to make the kind of profit the top performers in the industry accomplish.
In 2022, NARPM in their Financial Benchmarking Study gave a contrast between two types of Property Management companies in the industry:
Companies operating at a 11% profitability rate VERSUS The top performers consistently achieving an impressive 32% profitability rate
The key difference? Those at 11% profitability were entangled in what can aptly be described as a "financial fog." In simple terms, they lacked the clear vision and insights required to wield control over their financial destinies.
The solution? Daniel Craig, CEO of ProfitCoach emphasizes greatly on the “do or die metrics” for joining the top performers. Taking inspiration from Daniel, we have compiled an updated guide on the Top 10 leasing and marketing KPIs for property managers in 2023.
Don't have time to build these reports from scratch? Get pre-built Business Intelligence dashboards with LetHub. Send custom reports to owners and track leasing team's performance in one place.
In this blog, we're going the extra mile by also including these details of each KPI:
Response time on inquiries measures the time it takes for property managers to respond to incoming prospect inquiries from ILS over emails or phone calls.
Response Time = (Time taken to Respond - Time of Inquiry)
The average response time for email inquiries is between 1 hour to 10 hours. In contrast, live chat responses do not go longer than 3 to 5 minutes. However, the benchmark set in 2023 for email replies is 10 minutes to 6 hours.
You should be calculating this metric every quarter to see the performance of your lead and tenant communications. It is one of the most important leasing and marketing KPIs to measure timely.
A quick response is essential to capture as many leads as possible. This not only increases the number of leads in the upper end of the pipeline but also provides property managers with a broader range of tenant choices towards the end of the pipeline.
In today's age and time, responding to inquiries has been made easy by automating it. With LethHub, you can auto-respond to a high volume of inquiries 24/7 using our AI chatbot called River. This automation and live chatbot gives you 4 times the number of leads and saves your agents' valuable time.
Regional Property Managers, HR director
It is one of the relatively newer leasing and marketing KPIs that was officially introduced by NARPM in their 2022 performance guide. Direct labor efficiency assesses how efficiently property management staff or teams are utilizing their time and resources to accomplish tasks.
Direct Labor Efficiency = (Total Output / Total Labor Cost)
Total Output includes Gross Profit minus direct labor, benefits, and employer burden.
According to NARPM, 3.96 is the benchmark set whereas the average in the industry is 2.90.
For a property management company, you should be tracking DLER on a rolling 12-month basis to account for seasonality as it is one of the most important leasing and marketing KPIs for property managers in 2023 to measure efficiency. The measure of efficiency will tell you exactly how motivated your teams are whether it’s the leasing team or marketing team etc.
In your company labour cost is one of the largest expenses, and because of that you should be aware of who is doing what. How much time is being taken to complete those tasks? What tasks are costing you more time?
All these questions above will help you decide where to cut your expenses and what steps to take to increase efficiency. Such as in 2023, the way to efficiency is taking monotonous tasks off of your teams’ plates and automating them.
HR VP, Regional Property Managers
This metric calculates the number of rental units managed by each member of the property management team, providing insights into workload distribution.
Units per Team Member = (Total Units Managed / Number of Team Members)
According to NARPM’s report. For single-family housing industry average calculated was 49 in 2021. Whereas the benchmark set for single-family housing is 59.
It should be calculated every quarter to find out which quarter is successful and how the seasonality is affecting the numbers and efficiency of your members. This metric will also help you get an average of the number of units your property managers and leasing agents can manage at a time. This helps in planning and allocating resources appropriate for each team member. You should check it every quarter to analyze the profitability of the employees you have invested in.
Director of Operations, Accountants, Bookkeepers
All expenses related to running and maintenance of units of properties are referred to as operating expenses. These include all sorts of expenses of keeping the property running such as: property tax, electricity, upkeep and repairs, exterior work, insurance, management, and more.
Operating Expense per month = Salaries + Sales Commissions + Marketing Expenses + Rental Expenses + Utilities
You can read more about these expenses and calculate them easily by using our Free NOI calculator.
The operating expenses are calculated monthly, quarterly or annually. The reason why it is one the most significant leasing and marketing KPIs for property managers is because it helps you in planning your company’s budget allocation. It will allow you to track which department and tasks of yours are cost efficient and will easily allow you to track your ROI.
Property Managers, Marketing Agent
One of the most important leasing and marketing KPIs for property managers is Days on Market. It measures the average number of days it takes to rent out a vacant property unit, providing insights into the property's marketability and pricing strategy.
Days on Market = Total number of days a property or unit stays vacant
The industry average for a unit’s days-on-market is approximately 20-30 days. This is one the leasing and marketing KPIs that is dependent on location and seasonal changes, it is best to know your performance in different quarters. You can analyze the different properties’ days on market and measure if it is the location that is impacting it or other factors such as rent. Tracking this metric leads to quicker tenant placements and more efficient turnover.
There are a number of ways you can reduce your units’ days on market and not every company faces the same issues. But in 2023, the world is moving towards AI for faster tenant placements and lesser days on market/
Just hear it from Paragon Residential’s Head PM on how AI can reduce days on market by 89%.
Leasing Agent, Showings Coordinator, Assistant Property Manager
Tour cancellations track the percentage of scheduled property tours that are canceled before they take place, helping to gauge the effectiveness of the pre-tour qualification process.
Tour Cancellations = (Number of Tour Cancellations / Total Number of Scheduled Tours) * 100%
According to our calculations, on average 20% of prospects cancel tours or are a no-show. These cancellations can be converted into rescheduled tours by proper communications such as follow-up email reminders and SMS.
It is one of the most important leasing and marketing KPIs because it helps in understanding if communication with prospects is lacking. If there is a high tour cancellation percentage for a certain unit, it shows then there must be lack of engagement and/or communication with the prospects.
Legal consultants, Leasing agents, Property managers
This metric calculates the percentage of lease applications that are approved by the property management team.
Lease Application Approval Rate = (Number of Approved Applications / Total Applications) * 100%
The average in the industry is around 10% per unit as you should get at least 10 applications before an application is approved.
The metric should be evaluated every time a unit is leased, and a tenant has moved in. This metric aids your team in analyzing which processes are closing the deals faster. For example, in 2023 a company saw a low lease application approval rate and analyzed that they lost a number of prospects because they did not have a method of receiving online payments. If they had not calculated the metric, they would not be able to reach upon the conclusions
This will allow you to provide your leads and tenants with the best possible experience and get your leases approved quicker.
This metric measures the percentage of prospective tenants who submit guest cards and subsequently schedule property showings.
Guest Card to Showing Conversion Rate = (Number of Showings / Number of Guest Card Submissions) * 100%
A high conversion rate in this metric shows that your property management team is adept at not only marketing efforts but also facilitating the scheduling of tours. On the other hand, a lower conversion rate indicates bottlenecks in your booking process, warranting immediate attention. It is an important KPI to ensure that prospective tenants smoothly transition from interest to action.
There is not a one-size-fits-all average, per se, because of factors like seasonality and submarket location, etc. Typically, property management companies have a 10-15% lead-to-lease conversion rate without AI automation. With showings automation you can boost this number to 40-50%.
Don’t believe us? Read how Sue converted 26.2% more guest cards even while sleeping with the help of AI.
This metric calculates the percentage of property showings that result in tenants submitting completed lease applications.
Showing to Filled Application Conversion Rate = (Number of Filled Applications / Number of Showings) * 100%
According to our data for single-family housing the industry average for tour-to-lease conversion is about 40% and for multi-family housing it is about 55%.
This is one of the key leasing and marketing KPIs for property managers to track. It signals if the existing showing processes are successful and in what ways they can be improved.
A high conversion rate indicates that your property showing process is smooth and your showing agent did a great job to seal the deal.
On the flip side, a low conversion rate suggests a leak in your leasing pipeline. It's your opportunity to fine-tune your property presentation, communication, or follow-up strategies to increase the likelihood of converting those prospects into signed leases.
Marketing Strategists, Property Manager, Marketing Agent
Inquiries by source tracks the origin of inquiries or leads for rental properties, providing insights into which marketing channels or sources generate the most interest.
Inquiries by Source = Number of Inquiries from [Specific Source]
To calculate the number of inquiries from a specific source, simply count the inquiries received from places like:
You need to be able to attribute the number of prospect inquiries for specific units, properties, or campaigns to their source (such as listing sites) so you can evaluate the ROI of your marketing efforts and ensure you’re getting the most out of your marketing spend.
The data can be recorded and analyzed in a spreadsheet or CRM (Customer Relationship Management) system to track the performance of different lead sources. Or better yet get a leasing platform with pre-built dashboards for the above KPIs and save time.