By Andrew Keel
Managing manufactured housing communities can be tough work. Creating accurate key performance indicators (KPIs) can streamline your management processes and give you peace of mind as your portfolio grows. When growing my portfolio of nearly 3,000 lots, at times it felt like I was building the boat as I was sailing it. If I had implemented these KPIs sooner, I could have saved myself some significant headaches. This article will share with you what I think are the most important metrics you should monitor to feel confident about your manufactured housing community management.
Occupancy
Occupancy metrics are our most important, we instill this to our entire team daily in every meeting. If my staff have multiple “to-do’s” that pop up and they don’t know what to tackle first, we always want them to prioritize the “occupancy” related tasks first. When evaluating occupancy, our metrics can be broken down into these five KPIs:
- Heads in beds; total number of occupied units vs. total number of lots in the park
- Number of days vacant – on homes for sale and homes under renovation
- Number of showings completed
- Number of applications received
- Number of homes sold vs. number of homes available
We dive deep into each failing or “red” metric on our dashboard to discover the root issue with our operations. For example, a high number of showings and a low number of applications received could indicate condition issues with the home we are trying to sell.
Collections
We know that no matter what occupancy looks like, we will likely collect 90-95% of our anticipated revenue each month with relative ease. 95% is a great start, but that still means that we are chasing 5-10% of our tenants each month. To address our tenants with overdue rent, we use a “full-court press” approach, this includes reaching out via most methods possible. Our top KPIs for evaluating collections include:
- Percentage of amount billed we’ve collected
- Number of tenants that paid vs. the total number of tenants in the park
- Total tenants 60+ days delinquent
- Total “cash-for-keys” offers made
We compare each of these metrics with the numbers from previous years during this same time of the month in order to track trends and ensure we are moving in the right direction. We also track the total collection attempts, and the forms of these attempted communications to more effectively strategize future scenarios.
Water and Sewer Recapture
I’ve learned the hard way not to mess around when it comes to your water/sewer expense recapture. We monitor ‘slippage’ by daily tracking of Metron farnier master meters and Metron submeters under each home. We aim for a 90% utility recapture rate, however some months are worse than others, usually based on the weather. In order to avoid pouring money down the drain, we track utility slippage constantly via these KPIs:
- Daily meter readings (Master meters and submeters)
- Monthly financial review of the utility income and expenses
- Number of water leaks per year
We watch the usage numbers and compare them to the averages month over month to ensure large spikes don’t throw us off budget. When a spike occurs, we are usually notified within minutes so the leak can be identified quickly to avoid large slippage costs.
Property Condition
Property conditions are extremely important for the tenant experience. Poorly maintained manufactured housing communities will not only drive good tenants out, they will also make the property less valuable. Identifying, tracking, and resolving rule violations can be a daunting task for a part time on site manager. Monthly drive-through videos are a great approach so off site personnel can escalate action items as they see fit. Our KPIs for maintaining property condition are:
- Number of new violations per lot
- Number of violations fixed from the prior month, per lot
- Annual number of violations per lot
We have found that the constant offenders are better off living somewhere else. Keeping track of these above metrics tells our operations manager the story of who is a good fit for our community and who is not. We also randomly inspect each property every 2-3 months as this has been the best way to hold our onsite management accountable.
Budget and Actual
How do your projected values compare to your operating realities? Are your numbers different? Why? Here are a few KPIs we track for every project to help us stay on track with the returns we’ve projected before purchase:
Pro forma projections vs. the operational realities on each…
- Revenue
- Expenses
- Net Operating Income (NOI)
- CAPEX (capital improvements)
- Investor distribution amounts
Tracking our budget vs. actual differences is likely a large part in why our underwriting today for new projects is usually more accurate than it was when we first started buying mobile home parks over 7 years ago. Experience compounds and what gets measured, gets done.
I hope these KPIs give you a starting point to developing your own dashboard with your most important metrics. Knowing is the first step towards fixing. Red metrics are present in every organization, the key is being able to identify them and resolve them in a timely manner. Accountability is critical, we spend 80% of our time on the failing red metrics and 20% of our time on what’s green. KPIs allow you to track your team and create accountability standards based on results rather than ‘to-do’ lists. Peace of mind is invaluable and having the right KPIs in place can get you one step closer.
Andrew Keel is the CEO of Keel Team Mobile Home Park Investments. He currently owns and self-manages just under 40 communities across 16 states. His business model includes buying value-add communities, fixing the deferred maintenance and holding them long-term with agency financing. Please visit KeelTeam.com for more information.
