SS265: Optimizing the NOI: Cost-Cutting Strategies That Don’t Sacrifice Quality

  • January 18, 2026
  • Rokon Ahmed
  • Strategy Saturday
  • Comments Off on SS265: Optimizing the NOI: Cost-Cutting Strategies That Don’t Sacrifice Quality
SS265: Optimizing the NOI: Cost-Cutting Strategies That Don't Sacrifice Quality

Effective cost-cutting while improving operational efficiency is the goal of every multi-family investor. In this episode, Charles discusses reducing expenses without compromising the resident experience.

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Talking Points:

  • Optimizing Net Operating Income (NOI) in multifamily real estate is a delicate balance of increasing revenue and reducing operating expenses without compromising the quality that drives tenant satisfaction and retention. It is always a red flag when I review a multifamily investor’s underwriting and see significant expense reductions from the previous owner. For a value-add business plan to work, it requires an infusion of capital, not an extraction of capital. With that being said, there are some expenses that can be reduced, and that is what we are discussing today.
  • Utility and Energy Efficiency
    • Install LED lighting in common areas and utilize dusk-to-dawn sensors. Dusk-to-dawn sensors will cost money to install and connect to your outdoor and indoor common areas, but that is a one-time cost, and the savings will start immediately. I always install more lighting when I purchase a property. I have never had a tenant complain about too much lighting.
    • Low-Flow Water Fixtures. If the landlord is paying for water, install low-flow fixtures. This includes faucets, toilets, and shower heads.
    • Sub-Metering. If the landlord is paying for water, the best solution is sub-metering. It costs money and takes years to fully implement (as leases renew and tenants move), but it will decrease your water bill, a cost that keeps increasing, and shift that expense to your tenants. Once sub-metering is complete, you can have your new tenants cover their water bills and, instead of directly raising your rents, renew your current tenants at their current lease rate while having them start paying for their water.
  • Property Management and Vendors
    • It is customary for investors to change property managers when a property changes hands. Especially if there were management issues affecting the property’s performance. Hiring a property manager is not entirely done on pricing. Additionally, when you are reviewing pricing, you need to compare all pricing, not just the percentage that is charged. It is important to thoroughly review property managers before hiring one because changing property managers is very difficult. Paying more for property management does not always yield better management. We purchased a 22-unit property years ago to add to a portfolio of properties we owned in a neighborhood. The owner hired his ex-son-in-law to manage the property, and he charged the owner a 15% management fee. Our manager, who was doing a much better job at our other properties, was charging us 3.75% or 4%. 
    • Vendor contracts should be reviewed before you purchase a property to see what the terms of the contract are and if they hold over to the new owner. Furthermore, when you are hiring a property manager, ask them about the abilities of their service techs and what vendors they will call, for instance, if a plumbing or electrical problem is above their abilities. Having a property management company with knowledgeable techs who can snake drains, snake mains, replace fixtures, fix simple HVAC problems, etc., will save you a lot of money. It is the difference between paying $50 versus paying $250 for a simple service call.
  • Proactive Maintenance. Simply put, fix things correctly before they become a major problem. Not only will this eliminate property owner hassles with this problem in the future, but it will also stop your tenants from being hassled by constant patching. About 10 years ago, my wife and I rented an apartment, and the central AC consistently had issues. The property managers were called several times about the issue, and it was just a patch that lasted 2-3 weeks, and we would need to call again. It was a nice waterfront unit, but we ended up leaving, and the AC was a major reason.
  • Administrative Efficiencies
    • Leveraging technology is a great step for multifamily investors, even if they are just starting out.
    • Property Management Software allows you to automate administrative tasks like:
      • Rent collection and payment reminders.
      • Lease renewal alerts and lease document signing.
      • Maintenance requests. Makes it easier to route the issue to the appropriate person. Great, especially if multiple people are involved with your properties. You can route requests to the right person to handle.
    • Going Paperless and switching to digital communications for notices, reminders, billing, and work orders will make management much more streamlined.
  • Optimizing the NOI in multifamily real estate starts with strategic cost-cutting measures that enhance efficiency without diminishing the resident experience. If you want to learn more about maximizing property cash flow by reducing certain expenses, check out episode SS87.

Transcript:

Charles:
What if the way you’re cutting property expenses is actually hurting your NOI more than helping it? Most value add plans fail because someone tried to save money rather than invest where it matters. Welcome to Strategy Saturday. I’m Charles Carillo and today we’re talking about how to optimize your NOI with smart strategic cost cutting without lowering the quality your tenants depend on. So let’s get started. Optimizing net operating income and OY in multi-family real estate is a delicate balance of increasing revenue and reducing operating expenses without compromising the quality that drives tenant satisfaction and retention. There’s always a red flag when I review a multi-family investors underwriting and I see a significant expense reduction from the previous owner. Now for a value add plan to work, it requires an infusion of capital, not an extraction of capital. Now with that being said, there are some expenses that can be reduced and that is what we are discussing today.

Charles:
So the first one be utility in the energy efficiency. So install LED lighting in common areas and utilize dusted on sensors. Dusted on sensors will cost money to install. Mainly it’s all the wiring and the labor that goes with it. The sensors alone are very inexpensive and you connect that to your outdoor and indoor common areas. But that is a one-time cost and the savings will start immediately. I always install more lighting when I purchase a property and I’ve never had a tenant complain about too much lighting. The second part of this is low flow water fixtures. So if a landlord is paying for water, install low flow fixtures and this includes faucets, toilets and shower heads. This is great for smaller complexes I feel, and if you don’t want to pay for submetering, the best way of doing this is submetering. Now if the landlord is paying for water, the best solution is submetering.

Charles:
It costs money and it takes years to fully implement depending on the size of your property because as leases renew and tenants move, but it’ll decrease your water bill, a cost that keeps increasing and it keeps increasing because your town, your municipality is going to keep on increasing what the cost is for water and now you have to now pass that off to your tenants on the next time that they’re rebilling. If you’re doing some sort of like rubs a ratio utility billing system back to your tenants. So that’s one thing that you’re always playing catch up with the submetering. It’s a onetime way of it, just you push it all off and once the submetering is complete, you have your new tenants cover their water bills and instead of directly raising your rents and you can renew your current tenants at their current lease rate while having ’em start paying for their water, which is a great way of getting that off your books, telling them you are not raising rent, you’re just having them take care of paying for their water.

Charles:
It’s easier to do this on new rentals, but you could do this if you have some seasoned tenants and you don’t raise their rent, have ’em start paying for their water. This one is property management and vendors. So it is customary for investors to change property managers and when a property changes hands, I don’t remember one time when this hasn’t happened that we’ve purchased a property, especially if their work management issues affecting the property’s performance, which usually happens. ’cause If you’re buying properties with under market rents, then what happens is that the owner, previous owner and the current management, they got very complacent with just keeping everything running smoothly and not really maximizing or getting the most they could outta the property. So hiring a property manager is not entirely done on pricing. Additionally, when you are reviewing pricing, you need to compare all pricing, not just a percentage that’s charged.

Charles:
And it’s important to thoroughly review property managers before hiring ’em because changing property managers is very difficult and very time consuming. It’s a huge hassle going back with all the tenants, going back with all the vendors, making sure everything’s caught up. You have to now educate this person on everything that’s happening in this property because your previous property manager is not gonna do it. And paying more for a property management company does not always yield better management. We purchased a 22 unit property years ago to add to our portfolio of properties we had in this neighborhood and the owner had hired his ex son-in-law to manage the property and he charged the owner a 15% management fee. Now our manager who was doing a much better job at our other properties was charging us, I think it was like 3.75 or 4%. So a dramatic discount and it was a much better service.

Charles:
Now vendor contracts should be reviewed before you purchase a property to see what the terms the contract are and if they hold over to the new owner, a lot of them do. So furthermore, when you are hiring a property manager, ask them about the abilities of their service techs and what vendors they’ll call. For instance, if a plumbing or electrical problem is above their abilities and having a property management company with knowledge and knowledgeable techs who can, you know, snake drains, snake mains, replace fixtures, fix simple HVAC problems, et cetera, will save you a lot of money. It’s a difference between paying $250 versus $50 for a simple service call. The next part of this is proactive maintenance. And this is something that value add investors don’t really like doing because it really cuts into their profits and people that are flipping houses the same thing.

Charles:
But if you’re a long-term investor, simply put fix things correctly before they become a major problem. Not only will this eliminate property owner hassles with this problem in the future, but it’ll also stop your tenants from being hassled by constant patching. About 10 years ago, my wife and I rented an apartment and the central AC consistently had issues. It was a great unit, it was waterfront. We were on the corner of this building, but the problem managers were called several times about the issue and it was just a patch that lasted two to three weeks and they would need to call ’em again. It’s great, but it’s one of the things that we ended up leaving was because the AC was a major problem, administrative efficiencies. So leveraging technology is a great step for multifamily investors, even if they are just starting out. And this is something we’ll see when you’re buying properties with like mom and pop properties that have been owned for decades, if they’re doing the property management or if they have a property management company, this is something the technology is usually where they’re really lacking, right?

Charles:
People are still sending in checks, they’re like calling some guy off site to fix something and no one else knows what’s going on. So property management software allows you really to automate administrative tasks like rent collection, payment reminders, lease renewal alerts lease document signing, maintenance request, which is a huge one. So your whole team is on the same page and it makes it easier to kinda root the issue to the appropriate person. Great, especially if multiple people are involved with your properties, you can root requests really to the right person to handle that specific issue. Now going paperless and switching to digital communications for notices, reminders, billing and work orders will also make management much more streamlined for you and your tenants. Now, optimizing the NOI and multifamily real estate starts with strategic cost cutting measures that enhance efficiency without diminishing the resident experience.

Charles:
If you wanna learn more about maximizing property cash flow by reducing certain expenses, check out episode SS87. That’s episode SS87. So I hope you enjoyed. Please remember to rate, review, subscribe to make comments on potential show topics at globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our courses and mentoring programs at syndicationsuperstars.com. That is syndicationsuperstars.com. Look for two more episodes next week. See you then.

Links Mentioned In The Episode:

  • SS87: Maximizing Property Cashflow by Reducing Certain Expenses

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