Plug the NOI Leak: Smart Strategies for Boosting Profitability Without Sacrificing Resident Experience

In our previous post, we highlighted the significant challenges multifamily businesses face today, from soaring insurance premiums and utility costs to increasing labor expenses and the hidden drain of resident turnover. These "NOI leaks" are making it harder than ever to maintain profitability.

Fortunately, you can control operating expenses and even unlock new revenue streams without resorting to desperate measures that harm your resident experience. The key lies in adopting smart strategies and leveraging advances in technology to drive efficiencies.

Strategy 1: Smart Expense Management

It might feel like you're caught in a financial current, but you can take control. Here's how to tackle those rising operating costs:

• Optimize Vendor Management: Don't be afraid to renegotiate terms with existing suppliers. Utilize business intelligence tools to track contract end dates and streamline your RFQ process. Exploring new vendors and negotiating bulk discounts across your portfolio can lead to significant savings. Sometimes, a longer contract with better terms is worth considering, but always prioritize service quality.
• Embrace Energy Efficiency & Utility Management: While there's an initial investment, green energy strategies offer long-term dividends. Think LED lighting, smart thermostats, and energy-efficient HVAC systems. Conduct regular energy audits to identify waste. Whenever possible, individually meter units so residents pay for what they consume, or consider implementing RUBS to encourage conservation. Crucially, have a strategy for vacant units (i.e.check for leaks, reseal weather stripping, and maintain AC filters) to keep costs down.
• Streamline Property Operations with Automation: This is where modern property management software, particularly with AI and automation, becomes your superpower. You can offload repeatable, mundane tasks like rent collection, lease renewals, maintenance requests, and some accounting functions to AI agents, allowing your existing headcount to be more efficient, focusing on high-value tasks that directly improve the resident experience, all while significantly reducing human error.
• Shift to Proactive Maintenance: Stop playing catch-up. Prioritize preventative maintenance to reduce long-term costs. Simple actions like scheduled HVAC filter changes can cut down peak season calls, extend unit life, and reduce energy consumption. Proactive tasks like gutter cleaning, roof inspections, and routine pest control mitigate potential frustrations for residents and stabilize your maintenance budget.
• Optimize Labor, Insurance, & Taxes: Use BI tools to monitor employment levels and identify efficiencies, whether through cross-training, consolidating roles, or staggering hours as long as you don’t compromise the resident experience. For insurance, consult your agent annually to review coverage, consider higher deductibles, and install mitigation features (like water leak detectors) to potentially lower rates. And if you believe your property valuation is incorrect, challenging it can lead to significant savings.

Strategy 2: Unlocking Hidden Revenue Opportunities

Reducing costs is only half the battle. You can also proactively boost your NOI by tapping into often-overlooked revenue streams:

Focus on Retention: This is one of the most powerful strategies. Retaining an existing resident is far more cost-effective than acquiring a new one (remember that ~$4,000 turnover cost?). Implement AI-driven renewals workflows that send personalized offers based on data, and invest in resident platforms that make payments, maintenance requests, and lease renewals seamless. Use automated communication and feedback loops to ensure residents feel valued and heard, drastically improving loyalty.

Smart Revenue Management: Avoid indiscriminate rent increases that can alienate residents. Instead, adopt a value-based approach by implementing upgrades (e.g., smart thermostats, in-unit W/D) that justify rental adjustments. For long-term or financially struggling residents, consider flexible rent payment options like temporary deferrals or structured grace periods; these empathetic solutions can reduce missed payments and sudden turnover. Finally, leverage revenue intelligence tools for unit-by-unit pricing that considers market data, demand, and unit features, ensuring you have all the information needed to set competitive rates.

Monetize Ancillary Revenue Streams: With the right technology, you can introduce new revenue streams that both enhance the resident experience and boost your bottom line:

• Renters Insurance: Offer it during the lease process. It protects your property and creates an additional income channel, easily automated within your resident portal.
• Rent Credit Reporting: Offer to report on-time rent payments to credit bureaus for a small fee. This helps residents build credit, especially those with thin or bad credit, and incentivizes on-time payments.
• Deposit Alternatives: Programs like low-cost surety bonds or deposit waivers lower the financial barrier to move-in for residents while earning you service fees or commissions. They're easy to bundle with auto-pay enrollment and renters insurance during onboarding.

Future-Proof Your NOI

Maximizing NOI isn't about drastic cuts or nickel-and-diming residents. It's about creating more efficient processes that create value at every step, empowering your site teams, and ultimately fostering a better resident experience. By embracing these resident-focused retention strategies, value-based pricing, and streamlined ancillary revenue programs, you can achieve sustainable NOI growth.

A comprehensive property operating system, like Entrata's all-in-one solution, equips property managers with the automation, data, and tools needed to reduce costs and build long-term NOI growth with precision and scalability.

Ready to stop the leaks and start growing your NOI? Request a demo today and see how a unified platform can transform your operations or download our latest ebook, Fix the NOI Leak | Proven Tactics to Control Operating Expenses Without Sacrificing Resident Experience.