Average Days-to-Lease gauges the efficiency of a rental property’s leasing process and is yet another pivotal metric when assessing the performance of a property management firm.  Average Days-to-Lease quantifies the average time, often in days, that a property remains vacant before a new tenant signs a lease. Put simply, a shorter average indicates robust marketing, effective tenant screening, and competitive pricing.

Conversely, a prolonged period might highlight issues such as suboptimal marketing strategies, inadequate property maintenance, or unfavourable market conditions and pricing. Monitoring this metric ultimately enables property managers to fine-tune their strategies, minimize vacancy-related revenue loss, and maintain a healthy cash flow for property owners.

Benefits of Average Days-to-Lease

The Average Days-to-Lease metric offers significant advantages in property management, providing property managers with a quick overview of the effectiveness of their leasing process. Optimizing this metric will ultimately lead to filling vacancies quicker, improved tenant screening, competitive pricing strategies, as well as enhancing the property’s overall attractiveness to potential tenants. In other words, regular tracking of the Average Days-to-Lease metric enables proactive adjustments to marketing tactics or property presentation, reducing revenue loss from extended vacancies.

Limitations of Average Days-to-Lease

While Average Days-to-Lease is a valuable metric, it nonetheless comes with its own set of limitations. For example, this metric might not fully consider seasonal market variations, potentially leading to inaccurate comparisons. The Average Days-to-Lease metric also doesn’t delve into the reasons behind longer leasing times, such as economic trends or property-specific factors.

Additionally, an exclusive focus on speed might compromise tenant screening quality, leading to problematic tenants. Finally, rapid turnovers could strain property maintenance efforts. Overall, it is recommended that property managers use this metric in conjunction with others to gain a comprehensive understanding of leasing performance.

How is Average Days-to-Lease calculated?

Calculating Average Days-to-Lease involves summing up the number of days properties remain vacant before being leased and dividing it by the total number of leased properties within a specific time frame. The formula is:

Average Days-to-Lease = Total Vacancy Days / Number of Leased Properties

For instance, if you have three properties vacant for 10, 15, and 20 days respectively, and during that time two properties were leased, the calculation would be:

Average Days-to-Lease = (10 + 15 + 20) / 2 = 45 / 2 = 22.5 days