The 5 most important KPIs in Property Asset Management

Let's be honest: keeping track of all the important key figures in asset management isn't always easy.

From analysis and evaluation to management and optimization – through to the sale of properties or portfolios: the entire value chain must be covered.

The management of fixed assets and the associated requirements therefore require clear objectives. With the help of specific key performance indicators (KPIs), you can set, track and ultimately successfully implement these objectives.

What are KPIs in Property Asset Management?

In short – KPIs are measurable values ​​that show you how well you are implementing your set company goals. The key figures naturally vary depending on the industry and sector. For a marketing professional, an important KPI is the number of readers for a particular blog, in retail it is the number of items purchased per purchase.

And in property asset management? We will show you which KPIs are important for you and why you should definitely keep an eye on them.

KPI No. 1: Vacancy rate

The vacancy rate is one of the most important indicators for you as a property asset manager. It shows the ratio of unoccupied rental units to the total number of apartments in a building or city. The vacancy rate plays a particularly important role in income-generating properties. The higher the vacancy rate, the lower your rental income per square meter.

By keeping a constant eye on your vacancy rate – and immediately recognizing an increase – you can react and counteract it more quickly.

The vacancy rate is calculated by multiplying the number of vacant units by 100 and then dividing by the total number of units.

When considering vacancy, it is crucial to consider the type of vacancy involved. A distinction is made between temporary vacancy, for example during renovation work, and permanent vacancy due to a lack of market demand.

KPI No. 2: Fluctuation rate

As a property asset manager, you are probably aware of the importance of your tenants to your business.

Another key figure that you should therefore pay attention to is the turnover rate of your tenants. In other words: the number of tenants moving in and out, or the frequency with which your tenants change. The turnover is a measure of property and location satisfaction, and it can be generally stated that tenants move every one to two years, depending on the market segment.

If tenant turnover is significantly above average, it is probably time to ask yourself a few questions:

• Are repairs and maintenance overdue?
• Am I charging too much for rent?
• Am I not responding to my tenants’ concerns or questions?

From the perspective of housing providers, it is therefore particularly important to take appropriate measures to reduce or keep the level of fluctuation low and to reduce the fluctuation balance (acquisition of new tenants less tenant losses due to vacancies). This saves on rental losses, tenant turnover and vacancy costs.

Tenant loyalty and ultimately good customer service can become a decisive competitive advantage for real estate companies. Accessibility and reliability are two classic examples by which tenants determine the quality of service provided by their landlord.

KPI No. 3: Return

A reasonable return is the goal of every investment. If you put the return in relation to the capital invested and the costs incurred, you get the return on the investment. The purpose of a property investment is to save on rent if you use it yourself, and to generate rental income if you use it for someone else. While using a house or apartment yourself promises a high psychological return in the form of independence and well-being, the profitability of rented properties must be assessed by means of an exact return calculation.

When investing in real estate, the return plays the main role in selecting suitable properties. Why?

Return is a synonym for return on total capital and refers to the percentage that corresponds to the ratio of the annual net income of a capital investment to the underlying investment amount.

The advantages of real estate investment are numerous and not only is concrete gold considered low-risk, but over the years you also benefit from an increase in value.

But as always, anyone who wants to invest must carefully weigh up the opportunities and risks. A decisive factor in assessing a property is calculating the property return.

Most property managers will be able to find ways to cut costs to improve returns, but this is easier when all the information needed is always available and accurate.

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KPI No. 4: OPEX

OPEX (operating expenses) are the regularly recurring expenses that arise from the use and maintenance of a property. Typical operating costs include the costs of water supply and drainage, heating costs, chimney sweep fees, electricity, garbage collection, property and liability insurance and property taxes.

Operating costs have a direct impact on cash flow and form a critical part of its calculation: How much of all income will inevitably go into the upkeep and maintenance of a property?

For you, the goal might be to maximize performance versus OPEX. In this way, OPEX represents a key measurement and KPI for the efficiency of your real estate business over time.

If we assume that the goal of a company is to maximize net income or profit, minimizing OPEX is a crucial part of business planning and management. However, it should be remembered that it is not always about spending as little as possible, but rather spending sensibly.

KPI No. 5: Net operating income (NOI) and sales growth

Net operating income (NOI) is used in the real estate market to determine the income a property generates minus operating expenses.

NOI also determines the capitalization rate, value or return on a property.

If there is a loss of rental income due to vacancy, maintenance and other factors, the previous year's data is taken into account. A property can generate its income from rental, parking and service fees.

Calculating the NOI :

Net operating profit = gross operating profit – (operating expenses ÷ gross income)

Securing sales growth through key figures

These 5 KPIs can help you ensure the long-term efficiency of the properties you manage, drive growth and maximize returns for investors.

One way to increase revenue is to minimize operating costs. To do this, you can offer your asset managers CAPEX plans to optimize costs and tenant retention.

There is a lot of information that should always be accessible to customers, investors and also within the company. If someone asks you about the vacancy rate of your portfolio, can you answer directly?

Key figures, their visualization and the use of the latest technologies help you to simplify business processes and gain a better overview of them.

Assetti can support you with all of this and also, for example, create reports and plan budgets.