3 NOI Property Management Strategies to Boost Your Profits
- DrizzleX
- 1 day ago
- 8 min read
Managing a property comes with numerous daily challenges. Rising utility bills can eat into your budget, and even a few vacant units can lower your income fast. You also have to deal with maintenance issues, unexpected repairs, and keeping tenants happy.
All these things make it hard to grow your profits, even if you're doing your best to run things smoothly.
The good news is you don’t always need big changes to see better results. A few smart tweaks to how you manage your property can help you reduce operating expenses and increase your property's total revenue.
If you're looking for simple ways to boost your bottom line, explore our net operating income (NOI) property management strategies you can try right now.
What Is Net Operating Income?
Net operating income shows how much money a property makes after paying for daily expenses but before the mortgage, taxes, or major upgrades.
For property managers, it’s a simple way to check if your building is making money or losing it. Strong NOI helps with smart choices about repairs, rent, and future plans.
Net Operating Income vs Gross Operating Income
When you look at a rental property's financial metrics, you need to understand the difference between net operating income and gross operating income (GOI).
Both play a role in showing how well an investment property is doing, but they measure different things.
Gross Operating Income
Gross operating income is the total money the property makes before costs are taken out. This means adding rent revenue and other income the property collects.
In a multifamily rental property, this could include parking fees, laundry machines, or storage rentals.
Here's how to calculate GOI:
The formula is: Gross operating income = Rent revenue + Other income
Imagine you own a 10-unit apartment building. Each unit rents for $1,500 per month. That means:
Rent revenue – $1,500 × 10 units × 12 months = $180,000
Parking fees – 8 tenants pay $50 per month = $4,800
Laundry machines – Average of $200 per month = $2,400
Gross operating income = $180,000 + $4,800 + $2,400 = $187,200
Gross operating income gives a snapshot of how much cash the property can bring in, but it does not reflect the property’s profitability.
Since operating expenses are not included, real estate investors cannot judge how much the property actually returns.
Net Operating Income
Net operating income is calculated by subtracting operating expenses from the gross operating income.
These operating costs usually include property management fees, property taxes, insurance, repair costs, and common area maintenance.
Take note that NOI does not include mortgage principal and interest payments, capital expenditures, depreciation, or income taxes.
To calculate net operating income, take the gross operating income and subtract the operating expenses. Let's say, for example, your expenses look like this:
Property management fees – 8% of rent revenue = $14,400
Property taxes – $20,000
Insurance – $6,000
Repairs and maintenance costs – $8,000
Common area utilities and cleaning – $7,000
Our sample total operating expenses come to $55,400. Now, subtract those expenses from the gross operating income to calculate NOI.
$187,200 – $55,400 = $131,800. This figure is your property's net operating income.
How Increasing NOI Boosts Property Value
Real estate professionals use net operating income to measure all the revenue generated by a property’s income. They use this figure to evaluate income-generating assets because it shows the cash flow available before financing and taxes.
Investors often compare NOI against the purchase price using the capitalization rate (cap rate) to decide if a property is a good investment.
Increasing your NOI means you raise the property value of your multifamily building. Your property has a stronger cash flow, making it more attractive to buyers and lenders. It also helps owners secure better financing terms since banks see the property as less risky.
3 Effective NOI Property Management Strategies You Should Try Out
If you want to grow your rental income without raising rent, here are three easy property management tips that can help boost your property's financial performance.
1. Save on Utilities
Saving money on utilities is one of the fastest ways to boost net operating income. Many older buildings lose money through energy waste and poor water systems.
Here are some ways you can improve your NOI:
Get Energy and Water-Saving Devices
Installing energy and water-saving devices is a simple way to reduce monthly expenses. Start with smart thermostats that adjust heating and cooling based on tenant use. These cut down on energy waste without making units less comfortable.
Switch to LED lighting in units and common areas. LEDs use less electricity and last longer than regular bulbs, which saves money on both power and maintenance.
For water savings, you can install water conservation devices like low-flow showerheads, toilets, and faucets to reduce usage without changing water pressure.
Monitor Utilities
Another way to reduce utility costs is by measuring water use more accurately. This is where a submetering system comes in.
A submetering system is a setup that tracks utility usage at the unit or tenant level inside a property.
Instead of measuring total usage for the whole building with one master meter, a submetering system breaks it down so you can see how much each unit or tenant uses.
Since most multifamily buildings in the U.S. do not have submetering capabilities, they instead use micrometers. These are installed at the fixture level, on toilets, sinks, and showers.
They measure every drop that flows through each fixture and help you monitor utility usage and detect leaks early.
Submetering helps tenants become more aware of their own water usage. When they know they’re responsible for their energy or water bills, they tend to waste less.
This can lead to lower overall water usage in the building. It also makes tenant billing more fair, since each tenant pays for what they use.
2. Use Property Management Software
Using the right property management software can help you manage the operations of your property with less stress. A good suite of property management tools lets you handle everything in one place.
This includes maintenance and rent collection, tenant screening and lease management, income tracking, and expense reports. You don’t need to jump between spreadsheets or chase down payments manually.
Many property management platforms offer tools like free rental analysis, which helps you decide how much to charge based on current market trends. This supports smarter pricing decisions that can increase your NOI.
With property management services like Buildium, AppFolio, or Rentec Direct, you can streamline your rental experience.
These platforms make it easier to manage payments, maintenance requests, and communication with tenants. You can respond faster to issues and stay organized without the hassle. Most systems also include resident screening and lease management features.
You can find better tenants with a rigorous screening process, including background checks, animal screening, and credit report checks. This lowers the risk of missed payments and tenant problems.
3. Improve Maintenance Processes
Staying on top of maintenance helps keep your property in good shape and can boost your NOI.
A few simple changes in how you handle repairs can save money, reduce stress, and keep tenants happy.
Use Preventive Maintenance to Avoid Costly Repairs
Waiting for things to break often leads to bigger and more expensive problems. Instead, set a schedule to check important systems like plumbing, HVAC, and roofing.
Fixing small issues like a dripping faucet early helps you avoid major damage and surprise costs later. You can also use a landlord maintenance checklist to help you stay organized. This makes it easier to track what needs attention each month, season, or year.
Respond Quickly to Work Orders to Boost Tenant Satisfaction
When tenants report a problem, respond as soon as possible. Fast service builds trust and helps keep good tenants longer.
It also reduces complaints and limits damage if something needs urgent attention, like a water leak or broken heater.
Property maintenance software can help you respond faster to work orders. Aside from letting you schedule inspections, your tenants can also send requests online, so small issues don’t get missed.
It also stores repair history, helping you spot recurring problems and plan better. Plus, it makes budgeting easier by showing how much you spend on maintenance over time.
How DrizzleX Helps You Boost Your Property's NOI
DrizzleX helps you cut water waste and raise your net operating income. Hidden leaks like running toilets and dripping faucets can drain your budget. DrizzleX finds these problems fast and notifies you before they drive up your water bills.
Most properties using DrizzleX reduce their water bills by 25% to 45%. That means lower expenses and higher NOI. Plus, the system pays for itself in about nine months through water savings.
Everything is simple to manage for property owners with our user-friendly dashboard. You can see water usage, leaks, and tenant bills all in one place.
Here's what DrizzleX offers you:
Usage reports – DrizzleX gives you clear water reports with our user-friendly online portal, so you can spot waste and share real data with tenants. This helps cut costs and support better decisions.
Find hidden leaks – DrizzleX tracks water flow and alerts you to silent leaks you can’t see during inspections. You’ll know where the leak is and how much it’s costing you.
Email alerts – When a leak is detected, DrizzleX sends an email with the unit number, the leaking fixture, how many gallons were lost, and steps to fix the problem.
Tenant billing – DrizzleX makes it easy to bill tenants based on actual use. When tenants pay for their water, they use less, helping you reduce costs and improve NOI.
AI predictions – Get monthly water usage forecasts for each unit, helping you spot spikes early and find new savings opportunities.
Water Savings at Eaves Park With DrizzleX
Our case study conducted in Eaves Park in Washington, DC, demonstrates the significant impact a smart water management system can have on property managers.
The 120-unit complex, home to 240 tenants, installed DrizzleX to monitor and reduce water use in toilets and showers.
In just nine months, average daily water use dropped from 18,298 gallons to 14,609 gallons. This meant tenants used about 15 fewer gallons per day, and monthly costs per unit fell from $118.24 to $94.40.
The savings added up quickly. With a local water rate of $18.69 per HCF, the property saved about 1.3 HCF per unit each month. In total, that meant a 20% cut in costs, equal to $33,643 over the reporting period.
If those savings keep up, the property could add more than $44,000 a year to its NOI.
FAQs About NOI Property Management
What does NOI mean in property management?
NOI, or net operating income, is the income an income-producing property makes after covering operating expenses but before taxes and debt payments.
It helps commercial real estate investors measure how well the property is performing and plays a big role in judging property value and long-term real estate investment potential.
What is a good NOI rate?
A good NOI rate depends on the property type and location, but many commercial real estate investors look for returns that show strong cash flow compared to the property value.
Property management systems often track NOI to help owners see if their income-producing property is generating a solid return compared to similar investments.
Is NOI take-home pay?
No, NOI is not take-home pay. It shows how much money an income-producing property makes before paying loans, taxes, or other financing costs.
Commercial real estate investors use it to judge performance, while personal take-home pay is what’s left after taxes and deductions, so they are not the same.
Is the management fee included in the NOI?
Yes, the management fee is usually included in NOI because it is an operating expense tied to property management systems.
Since fees for running and maintaining an income-producing property directly affect cash flow, they are factored in before commercial real estate investors calculate NOI and assess property value.
