How to Increase NOI: 3 Strategies for Multifamily Investors

Rising operating costs, market volatility, and evolving tenant expectations make it more challenging than ever to maximize multifamily portfolio performance. For multifamily investors and operators, understanding and optimizing net operating income (NOI) is the cornerstone of sustainable asset growth and valuation. So the big question is how to increase NOI.

While raising rents might seem like the quickest path to boosting NOI in real estate, savvy investors know that sustainable growth requires a more nuanced approach. From operational efficiencies to technology-driven solutions, let’s explore proven strategies that can help you increase NOI while driving tenant satisfaction and maximizing property value.

What is NOI? Formula & meaning

Before diving into growth strategies, let’s establish a clear foundation. Net operating income, or NOI, represents a property’s total revenue minus its operating expenses. The NOI formula is straightforward:

Net Operating Income = Total Revenue – Operating Expenses

The resulting figure—your NOI—provides crucial insights into your property’s operational efficiency and financial health. 

But what is a good NOI? 

The answer varies by market and property type, but investors typically aim for an NOI ratio (NOI divided by total revenue) of 60-70% for well-managed multifamily properties.

3 strategies to increase NOI in real estate

Boosting NOI requires a balanced approach that combines revenue optimization with strategic cost management. Here are twelve proven strategies that go beyond simple rent increases to drive sustainable NOI growth.

1. Optimize revenue streams (beyond rent hikes)

While rent increases are the most obvious path to NOI growth, sustainable revenue optimization requires a more nuanced approach. The most successful properties diversify their income streams in ways that not only boost NOI but also enhance property value and resident satisfaction.

Premium unit upgrades

The modern renter increasingly values personalization and technology, presenting an opportunity to add strategic value-add enhancements. A well-executed smart home technology package, including connected thermostats, locks, and lighting systems, can command monthly premiums of $50-75 per unit. These upgrades not only generate additional revenue but also reduce operational costs through improved energy management and streamlined access control.

Luxury finish packages represent another significant opportunity for unit differentiation. Properties that invest in upgraded countertops, premium flooring, and designer lighting fixtures routinely secure $100-200 monthly premiums over standard units. The key to success lies in carefully analyzing the market and implementing upgrades cost-effectively. Start with a pilot program of 5-10 units to test market response and refine your pricing strategy before expanding.

Storage solutions

In urban markets where space comes at a premium, creative storage solutions can transform underutilized areas into significant revenue generators. 

For example, thoughtfully converting basement space into secure storage units can yield impressive returns. Consider a 500-square-foot underutilized basement space: when converted into 20 storage units renting at $75 monthly each, this space can generate $18,000 in annual revenue with minimal operating costs.

Beyond traditional storage rooms, consider offering specialized storage options, like secure bike storage. These facilities in urban locations can command $25-40 monthly per spot, while climate-controlled units for sensitive items often fetch $75-200 monthly. The key lies in understanding your resident demographic and their storage needs, then creating tailored solutions that address those specific pain points.

Comprehensive pet programs

Modern pet programs have evolved far beyond basic rent and deposits into comprehensive service packages that boost both revenue and resident satisfaction. 

Through tiered programming — from basic pet rent ($25-50 monthly) to premium packages with washing stations and dedicated pet areas ($50-75 monthly) — your property can maximize pet-related income while enhancing its amenity offerings. Properties that implement full-service pet programs report a 15-20% increase in pet-owning residents, higher retention rates, and additional revenue through strategic partnerships with local pet service providers.

Smart package management

The e-commerce boom has transformed package handling from a burden into a revenue opportunity. Modern package management solutions offer:

• Resident convenience: Basic locker access included in rent ensures satisfaction
• Revenue potential:
  • Extended storage fees ($1-2 daily after 48 hours) encourage prompt pickup
  • Premium handling ($5-10 per package) for high-value or oversized items

Amenity monetization

The key to successfully monetizing amenities lies in creating clear value propositions that residents willingly pay for. Private office pods and conference rooms, particularly relevant in today’s remote work environment, can generate $100-200 monthly per space. Entertainment areas, when properly equipped and maintained, command $100-300 per event for private use.

Partnership programs with service providers offer another avenue for revenue growth. Commission-based relationships with dry cleaning services, car washing vendors, and house cleaning providers typically yield 10-20% of service revenue while adding resident convenience. 

2. Reduce expenses without cutting corners

Boosting net operating income isn’t just about increasing revenue — it’s equally about minimizing waste and controlling costs without sacrificing the tenant experience. Thoughtfully managing expenses can lead to significant NOI improvements while keeping units competitive and operations efficient.

Invest in energy efficiency

Utility costs are among the largest operating expenses, but they’re also one of the easiest to reduce. Energy efficiency investments deliver both immediate savings and long-term NOI growth. Consider investing in:

• LED lighting upgrades: Replacing traditional bulbs with LED lighting can reduce energy costs by up to 75%. Smart lighting systems with motion sensors further optimize energy use by ensuring lights are only on when needed.
• Smart thermostats & HVAC optimization: Properties that install smart thermostats often see a 10-15% reduction in heating and cooling costs. Additionally, regular HVAC maintenance improves system efficiency and extends equipment lifespan.
• Solar energy: Installing solar panels requires an upfront investment, but tax incentives and reduced utility bills can significantly boost net operating income for real estate over time. Many properties leverage power purchase agreements (PPAs) to gain solar benefits without the capital expense.

Bulk purchasing & vendor negotiations

Aggregating purchasing power across multiple properties or negotiating bulk contracts for essential services — like maintenance supplies, internet, and landscaping — can significantly reduce costs.

• Bulk maintenance supplies: Centralized purchasing for HVAC filters, plumbing fixtures, and other common replacement parts can yield discounts of 10-30%.
• Internet & cable bulk agreements: Negotiate bulk deals with service providers so you can offer residents a better rate while generating ancillary revenue.
• Insurance optimization: Review your policy annually and work with a broker to bundle coverage for multiple properties to reduce premiums without compromising protection.

Proactive & predictive maintenance 

Emergency repairs can take a big bite out of net operating income, but proactive maintenance strategies minimize these risks while improving the resident experience.

• Predictive analytics for maintenance: AI-powered software can analyze usage patterns and identify potential failures before they happen, reducing emergency repair costs.
• Plumbing & HVAC inspections: Routine system checks prevent costly failures —such as burst pipes or broken A/C units —saving thousands in unexpected expenses.
• Roof & structural maintenance: Investing in preventative roof and foundation maintenance prevents major capital expenditures down the line.

3. Leverage AI and Proptech for NOI growth

Smart asset managers are using AI portfolio management and real estate technology to streamline operations, enhance efficiency, and increase net operating income. These tools help optimize pricing, automate administrative tasks, and improve decision-making.

AI-driven revenue optimization

Dynamic pricing models powered by AI help you adjust rents in real-time based on demand, seasonality, and market conditions. Instead of relying on fixed price increases, AI analyzes trends to maximize revenue without pushing tenants out.

• AI pricing models: These tools assess market rent trends, vacancy rates, and lease expirations to set optimal pricing, which helps you increase revenue without increasing turnover.
• Automated lease renewals: AI-driven lease management platforms help reduce vacancies by identifying renewal opportunities and automatically sending timely reminders to tenants.

Reduce administrative costs with automation

Labor costs can erode returns, but automation tools free up time for staff so they can spend more of it cultivating a better resident experience. Look into tools like:

• Chatbots & virtual assistants: AI-powered chatbots handle common tenant inquiries, maintenance requests, and lease renewals, reducing staffing needs.
• Automated work order management: Maintenance scheduling platforms ensure work orders are prioritized efficiently, minimizing delays and reducing contractor expenses.
• AI-powered reporting & forecasting: Asset managers can use AI tools to analyze operating expenses, predict future costs, and optimize budgeting decisions.

4. Strategic Lease & Vacancy Management

Vacancy is one of the biggest threats to NOI in real estate. A unit sitting empty isn’t just lost rent — it’s also wasted marketing spend, increased maintenance costs, and potential missed opportunities. Strategic leasing and vacancy management are essential for maximizing net operating income.

Use dynamic pricing to reduce vacancies

AI-powered dynamic pricing tools analyze market demand in real-time and adjust rental rates accordingly. This helps avoid prolonged vacancies while ensuring rental income remains competitive.

• Optimized lease expirations: Staggering lease end dates prevents excessive vacancies during slow leasing periods.
• Short-term leasing options: Offering flexible lease terms (e.g., six-month leases at a slight premium) can help fill gaps without sacrificing revenue.

Retain tenants longer to reduce turnover costs 

Every tenant who moves out represents a cost: marketing, unit turnover, and potential vacancy losses. Reducing tenant churn is one of the most effective ways to boost net operating income. Consider implementing:

• Loyalty & incentive programs: Offering lease renewal incentives, such as free carpet cleaning or a small rent concession, can encourage long-term occupancy.
• Resident engagement initiatives: Community events, responsive management, and personalized service improve tenant satisfaction and retention.

What causes an increase in net operating income?

Increasing NOI requires either increasing revenue and reducing expenses. A well-balanced approach ensures higher profitability without sacrificing tenant satisfaction or long-term asset value.

Revenue growth 

Simply raising rents isn’t always feasible, so you can instead focus on strategic revenue optimizations like:

• Optimized rent pricing: Market-driven pricing models ensure rent remains competitive while maximizing income. AI pricing tools help adjust rents based on demand, reducing vacancy loss.
• Value-add enhancements: Upgraded finishes, smart home features, and in-demand amenities like in-unit washers/dryers justify premium pricing and attract higher-paying tenants.
• Ancillary income streams: Charging for reserved parking, pet amenities, premium storage, and furnished units increases revenue without major operational changes.

Expense reduction

Cutting costs without harming the tenant experience is the name of the game.

• Utility efficiency: Smart thermostats, LED lighting, and water-efficient fixtures reduce energy bills with minimal upfront investment.
• Preventative maintenance: Proactive repairs prevent costly emergency fixes and extend the life of HVAC, plumbing, and roofing systems.
• Saving time for staff: Solutions like keyless access systems save time for staff who can control property access without managing physical keys or fobs.

Final thoughts

Net operating income isn’t just a number — it’s the heartbeat of a property’s financial performance. Strong NOI means higher property valuations, better refinancing options, and ultimately, greater returns. But increasing NOI requires more than just rent hikes. The most successful investors take a holistic approach, optimizing revenue streams, controlling expenses, and leveraging technology to make smarter, data-driven decisions.

Amid rising costs and shifting market dynamics, real estate owners who track, analyze, and optimize NOI in real time will stay ahead of the competition. AI-driven portfolio management tools make it easier than ever to identify inefficiencies, forecast trends, and fine-tune operations for maximum profitability.