Learning From Year End Analytics

Data love

This week our team is learning from year end analytics.

Learning from Year End Analytics

End of year

Through out the course of the year, we monitor our community expenses against the budget.  End of the year offers us opportunities for greater insights to our expenses.  We can look at the year to date, and understand that these are the expenses for the entire year.  We can of course, compare to budget and see where our plan was on track, and maybe where we missed.  And we can compare the current year expense to the previous year.(YOY).

Each of these comparisons opens the door to a variety of analytics that help us better understand the performance of our community.

Revenue Analytics

First and foremost, we need to understand the growth for our revenue.

Looking at the Net Revenue for the community we can determine the average economic rent,  We tend to characterize occupancy based on the number of occupied homes.   This is our physical occupancy.  But there are several items that impact economic rent, such as concessions for your new and existing residents; the gap between your existing leases and the current rental rates.

After determining economic rent, we should compare two ways.  First compare to the rents we are currently advertising, or our market rents.  The smaller the difference between these two amounts, the less value is being lost to concessions or existing leases.

The next comparison goes back to the Net Economic Income from the previous year.  Rents may have increased, but if we were adjusting behind the scenes with concessions, vacancy or bad debt.  It may have washed away any growth from our new increased rents.

Expense Analytics

We often use analytics with marketing.  Advertising costs divided by prospects or leases to determine the cost per lease demonstrating advertising effectiveness.

We can also take the same type of analytic to our maintenance expenses.

Taking your turnover expenses, paint, cleaning, carpet cleaning and any other related services used in the turnover process…total those cost items…then divide by your total number of apartments turned in 2021.  This provides the supply (including services, but not employee labor) for the average cost per turnover.

Painting Accessories

Painting Accessories

There’s an additional drill down to take the year to date expense for purchasing paint applied to the amount of turnover, you calculate the average cost for paint for turns.  And one step further, how does this compare with what we know about the amount of paint needed for a standard apartment?

Looking at the total expense for maintenance expenses.  We learn from reviewing each of the expense accounts.  Highest to lowest where are we spending our maintenance dollars.  Taking the total amount of maintenance costs, apply this amount to the total number of apartment homes.  This is your cost per unit per year to maintain this community.  For a Regional Manager, this dynamic is an opportunity to compare similar size communities.

Utility Analytics

If your community includes utilities as a provided service: you can calculate the cost per year, for natural gas, water, sewer or trash removal, per apartment home.  This creates a handy statistic for your leasing presentation as a “take away” from the rental rate when comparing to your competition.  Watching the utility expenses over the course of the year, and matching weather trends against increased heating or electric costs.  With a little bit of drill down, there’s the ability to see if buildings with the same physical layout, reflect similar utility usage.  The earlier any abnormalities are identified, the quicker you can respond to a possible water leak or other potential problem.

Net Operating Income and Cash Flow

Net Operating Income, our income after expenses is the determining factor for successful management.  Month after month of negative cash flow, having our expenses exceed the revenue we’ve collected make it impossible for a business to be successful.  Our apartment communities are businesses.  Every decision made for purchasing or discounting a rent to secure a lease or renewal must be viewed in terms of the long term impact on our business.  As we review the performance of the previous year, we can identify the opportunities to improve and see the growth in our revenue and property income.

Lori Hammond
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