Boosting NOI

Few property management considerations are as top-of-mind to real estate managers as net operating income (NOI). Because it directly reflects a property’s financial health and operational success, it’s a central focus for managers. A solid NOI can increase value, improve marketability, and ensure viability during emergencies or market fluctuations. 

Why is NOI important?

“Calculating NOI is the best way to see how a property is truly performing, measuring how much property- level profit the asset generates as a business,” says Terry Fields, associate professor and program director for the Weidner Property Management and Real Estate Program at the University of Alaska, Anchorage.

To calculate NOI, start with gross collected revenue and subtract operating expenses. 

“Real estate managers focus on NOI because it’s the part they can control,” says Fields. “They may not influence below-the-line items like loans or capital investments, but they can manage daily operations to keep recurring income high and operating costs low. Since NOI is used to determine the property’s value—by dividing it by the cap rate—it’s directly tied to their main objective: helping the owner maintain or increase the property’s worth. Controlling NOI is the most important way real estate managers can add value.”

For tips on controlling and improving NOI, JPM spoke with property management experts for their tried-and-true recommendations. 

1. Thoughtfully adjust rents.

Increasing rent is one of the most straightforward ways to increase NOI. To do this effectively, Katy Krueger, ARM^®, director of residential at Wangard Partners, AMO^®, in Milwaukee, says her team has successfully used revenue management software to set competitive rental rates. “The program we use allows us to make pricing decisions based on various factors, including our competitors’ asking rents,“ Krueger says. “We review this weekly and adjust everything from unit styles down to individual units. If a particular type of unit, such as studio, is leasing up quickly, we may decide to be more aggressive and increase our rent.” 

For units that aren’t leasing up as quickly, she says collecting feedback from residents and on-site teams can help managers adjust the units or understand what can be done to improve lease numbers. 

Nick Victorio, CPM^®, ARM^®, multifamily vice president for Bridge Property Management, agrees that consistent check-ins allow his team to address any pricing concerns, lease expirations, and occupancy trends. “Operationally, we monitor make-ready dates to ensure we are not creating an issue with availability.”

2. Creatively reduce expenses.

Cutting back on costs is a critical step in increasing NOI. Krueger stresses the importance of starting with a detailed budget. “You need to outline specific line items, like contracts for fire protection, and break out the inspections and other necessary tasks to ensure no costs are overlooked throughout the year,” she says.

Regular communication with vendors to understand the life expectancy of assets and implementing preventive maintenance can also ward off unexpected expenses. “For instance, routinely changing filters extends the life of HVAC systems, which reduces costly repairs,” Krueger explains. Additionally, collaborating with on-site teams and planning for marketing costs such as swag and resident events minimizes those financial surprises.

Fields emphasizes focusing on key operating cost areas, which are easily remembered with the mnemonic device MATIPU: maintenance, administration, taxes, insurance, payroll, and utilities. “It’s about making smart decisions on repairs versus replacements, training staff effectively, and knowing when to outsource versus handle tasks in-house,” he says. “How are you negotiating contracts? Are you securing multiple bids? Are you using bulk purchasing for economies of scale when appropriate? A combination of small improvements can add up, and all of those could be needle movers.”

Efficiently handling the move-out process is another opportunity to reduce costs. “Pre-inspecting units and focusing on pre-leasing can reduce vacancy loss, while tracking wear and tear versus damages helps recover turnover expenses,” Fields adds.

Other measures for property managers to explore for expense reduction include: 

• Challenging property taxes if you think they are incorrect, particularly during periods of renovation that bring lower occupancy 
• Considering insurance strategies such as self-insurance 
• Centralizing staffing and cross-training maintenance teams
• Integrating energy-efficient upgrades, such as LED lighting and temperature governors

3. Simplify operations with technology.

Leveraging technology has become essential for streamlining operations and improving efficiency in property management. Krueger says automation has transformed processes like rent collection, lease management, and maintenance requests. “This reduces administrative costs and time, benefiting not only residents but also on-site teams and accounting staff,” she explains. Virtual assistants, powered by AI, also enhance efficiency by answering prospect questions 24/7, setting up appointments, and prescreening potential tenants. “Virtual assistants ensure prospects have their questions answered after hours, and then the next day, we can personally pick up where it left off,” Krueger adds.

Victorio says technology has played a significant role in streamlining data and reports that were previously time-intensive. “The time we save is used for strategic planning and continuous reprioritization to improve operations,” he says. While his company has incorporated third parties that use AI technology to increase productivity, the organization is very cautious about how it includes it. “We recently updated our AI policy to restrict AI technology from being used to access sensitive data, and we have IT teams focused on this initiative.” 

Fields says today’s building management systems (BMSs) are getting more sophisticated, allowing teams to monitor and troubleshoot systems remotely. “These systems notify staff of issues like low pressure or temperature changes, saving time and preventing damage,” he explains. 

4. Optimize the resident experience. 

Focusing on resident satisfaction is a cornerstone of managing properties effectively to improve NOI. Krueger says prioritizing the resident experience from day one is crucial for increasing lease renewal rates. “By giving residents a good experience, we can stay under the national average turnover rate of about 50%–60%,” she explains. “This directly impacts the bottom line by reducing the operating expenses associated with turning over units.”

Krueger says her team takes many measures to ensure residents are satisfied. One example is a message service that residents sign up for when they move in. “Through the service, they can earn points for taking surveys, posting pictures, renewing their lease, and taking other actions,” she says. “Then those points equate to gift cards.”

Victorio adds that his properties also have added soccer fields, pickleball courts, and updated fitness centers. “These amenities allow residents to enjoy recreational activities without leaving the property, which increases satisfaction and retention,” Victorio says. Pet-friendly features, including additional pet parks and grooming stations, further attract tenants, while hosting monthly resident events fosters community engagement.

“Our underwriting team reviews which amenities to recommend based on each property’s unique needs and our national relationships with vendors,” Victorio says. 

In addition, a balanced approach to pricing renewals supports retention. “We review renewal pricing to align with market trends but avoid pushing rents to the maximum, which helps reduce turnover and associated expenses,” he says.

As more technology is used in this process, managers who continue to focus on the relationship element will stand out more than they did in the past, Fields says. “It used to be standard that you would get a handwritten follow-up letter after viewing an apartment,” he says. “That’s very different from 15 impersonal emails and a text every two days—messages that probably go straight to your spam folder.” 

Krueger agrees. “People want that personal touch when they’re looking for a home,” she says. “Just by following up with them directly and making sure they get exactly what they need—even if it comes down to what view they want or what floor they prefer—it’s important to tailor the experience to them.”

5. Implement alternative revenue streams.

Expanding revenue streams can boost NOI while enhancing the resident experience. Victorio says his team has implemented several innovative methods. “We have added EV charging stations as a revenue generator and to accommodate the growing demand for electric vehicles,” he explains. 

His company has also used parking services to temporarily rent out vacant parking spaces to residents wanting the convenience of additional parking for guests.

Krueger’s properties implemented a dog DNA program to identify the owners who do not clean up pet waste. “We charge the resident the initial fee, and if someone doesn’t pick up after their pet, we can identify the pet and charge a hefty fee,” she says. The program also cut down on pet waste, increasing satisfaction for all residents. 

Looking forward with NOI

As property managers look to the future, increasing NOI will require a balanced focus on both revenue growth and cost control while maintaining open communication with residents and on-site teams. By combining technology, strategic planning, and a focus on resident experience, property managers can position themselves to achieve sustainable NOI growth and meet the challenges of today and the future.