Benchmark: How long should you aim for when renting out?
The first step in becoming data-driven is to know your own key performance indicators.
If the first step is to know your own KPIs, the second step is to see where improvements are needed. To see where you're falling behind, you need benchmarks to see how your performance differs from others in the industry. This is why we at Homepal have started publishing benchmarks for real estate companies.
Today, we're looking at rental benchmarks - more specifically, rental duration.
Rental duration is about both the customer and you
How long a tenant chooses to stay in an object depends on personal reasons such as how much space is needed or changing financial situations, but it is also about the tenant's satisfaction with you as a landlord. High move-out statistics can indicate a lack of management and can often be associated with high costs.
This rental period is desirable:
36 months!
Why 36 months?
Of course, there are variations in what suits different types of real estate companies and different types of objects. A private fund company with commercial premises will certainly not strive for a rental period like a public housing company. What is common to all companies, however, is that a high level of relocation is costly: administration such as advertising, key management, inspection, viewings, etc., the risk of loss of rent and renovations for the next tenant.
Of course, these costs are not all bad, but the upgrades and renovations carried out increase the value of the property and thus justify rent increases. A rental period of around 36 months provides a good balance between long-term contact without unnecessary costs and the possibility of maintaining the portfolio without disturbing a tenant. Above all, we have seen that 36 months is mainly a guideline for housing.
If you have a high level of out-migration and re-migration
As mentioned above, 36 months can be an unusually long period overall, and high levels of turnover should be questioned.
Does the tenant belong to a target group whose needs do not match the property? Is there access to playgrounds, parking spaces, stroller storage, grocery stores, natural areas or anything else that is particularly important to your tenants? Are service requests handled in a timely manner (read more about fault reports here)? Is the area perceived as safe and secure? Is the property adequately maintained? Are neighbors friendly?
Do you keep track of your move-out and move-in statistics?
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