5 Key Metrics to Track With Asset Management Software
Today, data is produced at a much faster pace and in larger volumes than ever before. In fact, 2.5 quintillion bytes of data are created every day. However, data alone doesn’t intrinsically have value — it only becomes valuable after it’s been put into action. Because the commercial real estate (CRE) industry has historically been slow to adopt technology, many CRE professionals are challenged with accessing their data and extracting meaningful insights from it. Forward-thinking commercial real estate firms are leveraging asset management software to access and track KPIs to boost portfolio profitability. An asset management platform provides reporting tools that enable CRE firms to monitor portfolio performance and track key metrics, like NOI, using configurable dashboards.
Read ahead to learn about 5 powerful metrics you can track with asset management software and tips for leveraging that information.
1) Delinquency Rates
Delinquent loans, those that are past due by 30 days or more, occur when borrowers fail to make on-time payments. Since rent is the largest source of revenue, firms must stay on top of each property’s operations to ensure rents are received on time each month. Once delinquency rates get too high, critical business obligations and functions like payroll can be impacted (which can ultimately lead to negative NOI).
How Asset Management Software Can Help
With asset management software, delinquency rates can be tracked in a KPI dashboard using different visualizations like bar charts or line charts. Additionally this type of software enables you to leverage external information, such as which cities have the most delinquencies, to help you make informed decisions about the location of your next property. Plus, software enables you to take action when delinquency rates are dropping too low.
2) Occupancy Rates
An occupancy rate, the ratio of rented or used space to the total amount of available space, is an important metric for determining the success and desirability of a property. For investors, these numbers can be used to determine a property’s anticipated cash flows, the financial health of a specific area, or whether or not a property is properly managed. Thus, occupancy rates are important to track when it comes to attracting and retaining investor interest.
How Asset Management Software Can Help
With an asset management platform, you can set automated alerts to monitor notice to vacate increases. Additionally, you can benchmark performance to compare property performance and occupancy rates against competitors and other similar properties in your portfolio. With this benchmark data, you can uncover inefficiencies and proactively identify growth opportunities.
You can also create custom dashboards to easily track per-property or per-unit occupancy rates and quickly identify trends such as how many 1-bedrooms are fully occupied. This information is important because it gives you insights into how 1-, 2-, and 3-bedroom units are performing against one another.
3) Income and Expenses
It goes without saying that income and expenses are both critical metrics to track. Investors expect steady cash flow from their investments, and a property’s income and expenses are strong indicators as to whether they will receive consistent distributions. By tracking income and expenses, you can quickly provide potential and existing investors with critical financial information.
In addition to providing investors with timely information, firms should track income and financials to ensure properties are not underperforming. Having on-demand access to income data means that the firm can easily track its profitability and provide this information to investors (and potential investors) without delay.
How Asset Management Software Can Help
Asset management software allows you to simply login, open a dashboard, and then populate income for a single property or multiple properties in a couple of clicks. On-demand, real-time access eliminates the need to wait hours, days, or weeks for information. Additionally, the firm can maintain a steady pulse on income and expenses thanks to readily available dashboards.
4) Net Operating Income (NOI)
Net operating income (NOI) is one of the most widely used reporting metrics in commercial real estate. NOI is an important metric to track because it represents a property’s ability to generate income without considering its capital structure. NOI enables property performance evaluation prior to considering owner-specific factors.
How Asset Management Software Can Help
With asset management software, readily available data can help you track NOI. You can create and use dashboards to identify trends and find opportunities to boost NOI.
5) Operating Expense Ratio
The Operating Expense Ratio is useful for two reasons: it provides insight into how well the property is being run and it provides an easy basis for comparison between multiple properties. Simply put, the expense ratio signals how much of a property’s income is used towards expenses.
How Asset Management Software Can Help
Asset management software helps you track the operating expense ratio in an easy to access dashboard. View how your properties are operating and identify opportunities to improve operations with actionable insights from the operating expense data.
An asset management software, like Lobby CRE, provides pre-built KPI dashboards for these 5 metrics (and more!). Pre-built dashboards help you save time so that, instead of spending time creating templates, you can dive right into accessing and leveraging the data. Want to learn more about the 90+ metrics you can track in Lobby CRE? Click here to see Lobby CRE in action!
ABOUT LOBBY CRE
Lobby CRE transforms CRE asset management with automated operational and financial data intake, intelligent performance analysis and reporting, industry benchmarking, and configurable dashboards – all within a single platform.
