Landlords, let's talk reports and which of them you should analyze regularly.
Obviously you are familiar with the P&L Statement and the Balance Sheet but how about your Tenant Turnover, Rent-Ready Costs, and Revenue Growth Reports? These reports are your KPI Reports, Key Performance Indicators.
How many of you can raise your hands to say that you are even tracking these things? It's okay if not many of you raised your hands. You don’t know what you don't know. I will explain a little about the 3 reports I mentioned above and talk a little about how your bookkeeper can help you begin tracking these vital pieces of information about your business.
Let's start with the Tenant Turnover Report.
Tenant Turnover, for those of you who are new to landlording, is the process of getting a rental ready after a tenant has moved out. This report is vital because it can help you determine just how much it costs to fix any repairs in the unit, cleaning costs, and all the administrative costs associated with getting the unit occupied again. These costs include but is not limited to:
• Application Processing
• Showing the Rental (your time is money)
• Excessive Damage due to an upset tenant (this can be in the THOUSANDS)
When you are making your business budget for the year, you must look at this report to help you decided if you need to increase the budgeted amount in one of these mentioned areas or decrease it.
Rent-Ready Costs, similar to those reported on the Tenant Turnover report, these costs are, in my opinion, related to the materials needed to get a unit rent ready. Materials like paint, outlet covers, light bulbs, drip pans for the electric stove, etc. Knowing these costs, on a per unit basis, keeps you efficient. You will know just how much of a security deposit you will keep or if you need to raise the deposit on a particular unit.
Outstanding Debt and Revenue Growth go hand in hand. You cannot determine if you are increasing your revenue without first knowing what you outstanding debt is and how that effects your cashflow month to month. This is essentially your income to debt ratio report which can help you determine if a property is leverageable.
These are 4 of some of the most common Landlord KPI reports and should be monitored every month. Some you can push out quarterly or even annually but keeping a close eye on them monthly can help you make changes quickly before cashflow truly begins to be effected.
Ready to get these reports set up with your accounting system? AMH can help with that. Schedule a consult with us now!