Lifetime value of a door and an owner

If you know what an owner is worth over their lifetime, you know how much effort each lead deserves and what you can spend to win one. Include every fee type: management, leasing, renewal, maintenance markup and anything else you bill.

How the math works

1. Monthly revenue per door = average rent x management fee percent + other fees per year / 12.
2. Lifetime value per door = monthly revenue per door x 12 x average years an owner stays.
3. Lifetime value per owner = lifetime value per door x average doors per owner.
4. Value of one owner lead = lifetime value per owner x your close rate on owner leads.

How to use the result

The value of one owner lead is the number that should set your response standard. If each inquiry is worth a few thousand dollars before anyone picks up the phone, a five-minute callback rule and a written follow-up sequence pay for themselves. It is also the ceiling on what you can spend on marketing, referral fees or a business development hire per owner won.

Questions

What is lifetime value in property management?

The total revenue a door or an owner brings your company from the day they sign until the day they leave.

Should I use revenue or profit?

Revenue is easier to measure and is what this calculator uses. For spending decisions, multiply the result by your profit margin to see what you can afford to spend while staying profitable.

How do I find my close rate on owner leads?

Divide signed management agreements by owner leads received over the same period. Track it by lead source, because referral leads and web leads can close at very different rates.