Managing Your Investments
Stessa's dashboards are designed to help you take a step back and appreciate the big picture. When you're doing everything from mowing the lawn to cashing rent checks, it's easy to lose sight of what really matters. Even when you hire a full-time property manager, it can be hard to know whether your property is generating as much free cash flow as you expect.
Stessa crunches the numbers and tracks key metrics so you can spend less time in Excel and more time optimizing performance. You'll find that you make better property-level decisions when you prioritize your efforts to improve key investment metrics.
Getting Started with Dashboards
Your dashboards are currently set up to calculate key metrics based on projected (or scheduled) income and expenses. Most metrics will populate once you enter your rent rolls, a few key expense estimates, and acquisition details. Keep in mind that these metrics are reflections of current Property valuations (based on your selected methodology for each Property) and pro forma income and expense estimates. At this point, your Dashboards are not reflections of actual results.
Understanding The "Portfolio" Dashboard
Your Portfolio Dashboard rolls up data from all Properties in the Portfolio and calculates metrics accordingly.
This is the sum of the current values for all Properties in the Portfolio, as determined by your chosen valuation methodologies. By default, we use Zestimates (current market value approximations imported from Zillow), which is heavily influenced by recent comparable sales. You can change the methodology on each Property detail page and use Gross Rent Multiplier, Capitalization Rate, or simply enter a Custom Valuation.
Use the "Market/Purchase" toggle to switch between Current Valuation and Acquisition Cost Basis. Obviously, this metric only makes sense if you've inputted an acquisition cost for each Property and there's a valid valuation figure for each Property as well.
In the event Zillow doesn't provide a Zestimate for a given Property, you'll need to manually set up one of the other valuation methodologies.
This is the percentage change in total Portfolio Value since acquisition. It's calculated by subtracting acquisition price and capital expenses from current value, and then dividing by the original acquisition price. By default, this calculation does not take debt into account.
Use the "Appreciation/Leveraged" toggle to see how total debt effects overall Asset Return for the Portfolio. The small green/red number at lower right indicates total gain/loss for the Portfolio in pure dollar terms. Note that this metric includes the effect of capital expenses but not income or operating expenses.
This metric should not be confused with IRR or Cash-on-Cash Return, which can only be calculated with actual cash flow data.
The Occupancy metric is simply the total number of occupied units divided by the total number of rentable units. It treats each rental unit equally so if you have 10 units and 9 are occupied, your Occupancy is 90% even though your 1 vacant unit might be twice as large as the average occupied unit. The total number of vacant units across the Portfolio will appear in red in the upper right corner.
This amount is best understood as Gross Scheduled Rents, including Other Income like laundry, parking, and late fees. This is your top line revenue for all Properties in the Portfolio. This metric goes up when you raise rents, lease a new parking space, or add a Property to the Portfolio.
Debt is the total of all outstanding loan balances across all properties in the Portfolio. For this to calculate properly, you'll need to enter mortgage/debt details for each Property, including start date, amortization schedule, and interest rate. This number should go down each month by the total amount of principal paid during the preceding month.
Note that if you've connected a mortgage account, your debt balance should decline automatically each month when Stessa receives new information from your lender. If you've set up your mortgages manually instead, you'll need to update the debt balances manually from time to time. We plan to introduce a more automated way to track debt balances on manually added mortgages soon.
This is simply the total number of Properties included in the Portfolio. Use this to double-check that you've added all relevant Properties and ensure nothing is missing.
This is the total number of rentable units set up across all Properties in the Portfolio. It does not count Other Income sources like parking or laundry.
Think of this metric as scheduled Income less Operating Expenses less Debt Service less Capital Expenses. It's often called Net Cash Flow and is an estimate of how much cash you can expect to have available at the end of the month (or year) to distribute to yourself or investors. Use the "Monthly/Annual" toggle to switch between the current month and an annualized total.
Keep in mind that because this Cash Flow metric includes the effect of Debt Service and Capital Expenses, it's not the same as Net Income from a tax perspective. Your taxable income will differ due to the effects of depreciation, mortgage interest deductions, and other accounting details.
Understanding The "Property" Dashboard
The Property-level Dashboard looks a bit different than the Portfolio dashboard. Let's take a detailed look at each performance metric.
This is the current valuation for the Property, as determined by your selected Valuation Methodology. By default, Stessa uses a Zestimate provided by Zillow. You can change the selected methodology on the right side of the Property Dashboard, just below Occupancy.
This is the percentage change in total Property Value since acquisition, irrespective of how much time has passed since acquisition. It's calculated by subtracting acquisition price and capital expenses from current value, and then dividing by the original acquisition price.
By default, this calculation does not take debt into account but you can use the "Leveraged" toggle to see your Return with debt factored into the equation. "Annualized" is simply the average unleveraged Return per year since acquisition.
Effective Cap Rate
The Effective Cap Rate is simply current annualized Net Operating Income divided by current Market Value. This is the rate of return, before Debt Service and Capital Expenses, that a new investor would expect to receive if they bought the asset at today's Market Value. Keep in mind this is a forward-looking metric that projects a year's worth of NOI based on current scheduled monthly income and expenses.
Switch the toggle to "At Acquisition" to see your current cap rate based on acquisition pricing instead of Market Value. This version of Cap Rate is not quite the same as Cash-on-Cash Return since it does not take into account Capital Expenses (rehab costs, new roofs, etc.) incurred since the original purchase.
Gross Rent Multiplier (GRM) is simply the current Market Value of the Property divided by gross annual income from Rents and Other Income sources. This calculation includes all revenue, whether it's from rented units, parking, laundry, etc..
The Income metric is the same as gross income and is simply the sum of current scheduled Rents and Other Income. Think of it as top line revenue from all sources. Use the "Monthly/Annual" toggle to switch between the current month and a projected total for the next twelve months.
Net Operating Income
This is Income (as detailed above) less Operating Expenses. This calculation differs from Cash Flow in that it does not take into account Debt Service or Capital Expenses. Net Operating Income is a pure measure of how a Property is performing in actual dollar terms, irrespective of financing arrangements and capital improvements. Use the "Monthly/Annual" toggle to switch between the current month and a projected total for the next twelve months.
Cash Flow is calculated by subtracting monthly Debt Service and any Capital Expenses from Net Operating Income. This number is the net amount of actual cash you can expect to have available to distribute to yourself or investors at the end of each month. Use the "Monthly/Annual" toggle to switch between the current month and a projected total for the next twelve months.
The Occupancy metric is simply the total number of occupied units divided by the total number of rentable units. It treats each rental unit equally so if you have 10 units and 9 are occupied, your Occupancy is 90% even though your 1 vacant unit might be twice as large as the average occupied unit. The total number of vacant units across the Property will appear in red in the upper right corner.
Have More Questions About How a Metric is Calculated?
Is There a New Metric You'd Like to See Included?
Click the blue circle in the lower right corner to drop us a quick note and we'll get back to you shortly.