Occupancy is paying units divided by total units, the only number that says whether the income kept coming. Days on market only says how long a listing was up. PAM's target is 98%. The industry runs 85 to 93%.
Occupancy rate is paying units divided by total managed units. It's the only number that tells you whether the property produced income continuously. Days on market only tells you how long a listing was up, and says nothing about what happened before or after that window.
Below 85% occupancy usually signals a process breakdown in leasing, renewal or screening. Read together, occupancy rate, renewal rate and placement rate are the leading indicator for where your NOI is headed.
Every date in the calendar exists to make sure one resident's move-out and the next resident's move-in are the same week, not the same quarter.
Four months before the lease ends, the resident hears from PAM about renewing.
The resident has at least 90 days to review a renewal offer.
Any unit not renewed goes to market no later than 60 days before lease end.
A resident who gives notice early triggers a listing that same day.
What To Ask Your Manager
Ask for portfolio-wide occupancy, not days on market. Ask when your last vacant unit was listed relative to its lease end date, and who personally answered the inquiries. Every percentage point of occupancy lost is real income lost, and it compounds.
Industry Standard
85% to 93% occupancy. Days on market reported instead of occupancy, because it's the better-looking number. Listing begins after the resident has left. Inquiries routed to a call center or a web form. Showings scheduled around office hours.
PAM
A 98% occupancy target, published. Luxury vinyl plank flooring to cut turnover time between residents. A dedicated leasing specialist personally responding to every inquiry. Self-service showing scheduling, so a prospect sees the unit when they want to, not when the office happens to be open.
Picture two units, each listed for 28 days this year. The first was listed 60 days before its lease ended, and the new resident moved in the week after the old one left. Occupancy: 98%. The second was listed after the move-out and sat empty for those same 28 days. Occupancy: about 92%, and a month of rent gone.
Identical days on market. Different income. That's why PAM reports occupancy, and asks investors to hold their manager to it.
Days on market measures listing activity. Occupancy measures income continuity.
Score your current manager on occupancy, renewals, placement and fees. The result puts a dollar figure on the vacancy you're carrying.