Period rental object
What is it?
The key figure shows the average rental cost paid by tenants for the various rental objects within, for example, a portfolio or a specific property. It is usually calculated by taking the total rental income for a certain period of time and dividing it by the number of rental properties.
This key figure provides an indication of the average cost of tenants and is useful for property owners and managers to assess rent levels, price adjustments and revenue streams. It can also be useful for comparing rents with competing properties and market demands.
This KPI may differ from the total invoiced rent for a rental object, as this key figure only looks at the object's rent (and not the contract's).
How is it calculated?
(Summed base rent per year for rental objects / 12 mån) / Number of rental objects = Period rental object
Why is it important to follow?
Following the key figure is important for several reasons:
Pricing and Competitiveness: By monitoring the average monthly rent, property owners and managers can ensure that their rents are competitive in the market. It helps them determine the right price level for their rental properties and attract tenants.
Revenue planning: The key figure provides a basis for making realistic revenue forecasts and budget work. It is valuable for financial planning and for ensuring a stable income stream.
Market analysis: It provides insights into market trends and rental trends. It can be useful to identify opportunities to increase rents or to adapt to changing market conditions.
Cost comparison: It facilitates comparisons with other properties and areas to assess whether rent levels are competitive and whether there is room for improvement.
Lease negotiations: For commercial properties, this key figure is useful in negotiations with tenants. It provides a reference point for determining reasonable rent levels.
Investment decisions: It is important to make investment decisions, especially when it comes to buying or selling real estate, because the average monthly rent affects the value of the property.
In summary, the key figure provides valuable information for property owners and managers to optimize rental levels, revenue streams and market competitiveness. It is a central component of property management and financial planning.
Created by Homepal
11/1/2023
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