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KPI for Measuring of Ratio employee costs versus non-employee costs per real estate rental property posted in category Real Estate

WinningKPI - Real Estate - KPI for Measuring of Ratio employee costs versus non-employee costs per real estate rental property posted in category Real Estate Oana Boteanu This KPI is for measuring the ratio between employee and non-employee costs per real estate property. This is used by real estate companies to gain insight into the expenditure per company, which can then be used in strategic decision making.
This is calculated by comparing the percentages of both employee and non-employee costs.
Companies aim to keep both of these costs down, whilst keeping quality and increasing profits.
However, a high difference between these two may imply a misbalance, depending on the company’s circumstances.
For instance, a company that only has 10 properties for rental, and has 75% of the costs from employee pay, they may want to reduce that cost, in order to maximise profit.
Non-employee costs are likely to be property maintenance, advertising, business running costs etc. Joined with other KPIs measuring total costs, maintenance costs or profits, this KPI can be used to analyse the performance of the real estate company.

Formula:
% employee costs: % non-employee costs

For instance, in the example with the company having 75% employee costs, and a remaining of 25% non employee costs the ratio will be:
75%: 25%, 3:1, hence for every $1 spent on non employee costs, $3 are spent on employee costs.

KPI Units: ratio

KPI Time Frame: update annually

Posted by Oana Boteanu | Help to protect community: Flag for moderation

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KPI Expert Example:

A real estate agency is measuring the employee vs. non-employee costs per real estate property
Taking this step by step, the agency will start by measuring total costs per property, using the Average Total Costs per Real Estate Property KPI.

This is also done because if the agency wants to amend any of this prices, it is useful to monitor it through these KPIs and measure it against performance.

So,
For the Average Total Costs per Real Estate Property KPI:
Total costs for rental properties: $200 000
Total number of rental properties: 70

Average Total Costs per Real Estate Rental Property:
$200 000/70 = $2857

We can round this up to approximately $3000 per rental property.

Now to calculate Employee Costs vs. Non Employee Costs

If total costs are $200 000 let us assume:

Employee Costs: $120 000
Non-employee costs: $80 000

Hence, the ratio for total employee costs vs. non employee costs is:

80 000: 120 000 (divide all by 40 000), 2:3

Therefore, for every $2 spent on employee costs, 3 are spent on non-employee costs.

This formula can also be used using % or calculated per rental property.


Oana Boteanu | + | September 13, 2012 at 10:33 am

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