For multifamily operators, the playbook for growing NOI has fundamentally changed. Operating expenses are now roughly 39% above pre-pandemic levels, driven largely by insurance and property taxes, while expense ratios have climbed to around 42.4%. At the same time, rent growth has slowed. The result: margin compression across portfolios, even when top-line revenue holds steady.

For years, NOI growth was largely a revenue story—push rents, optimize occupancy, and let the market do the work. Today, that lever is far less reliable. In competitive markets, aggressive rent increases can backfire, driving vacancy and eroding overall returns. More importantly, pricing power is no longer fully in your control.

What is in your control is how you manage spend.

In today’s environment, operating expense discipline isn’t just a back-office function, it’s the most direct and durable path to protecting NOI. Decisions around vendors, purchasing processes, and operational efficiency now have an outsized impact on performance. When expense growth outpaces revenue, even strong leasing can’t prevent NOI erosion. And because every dollar saved flows directly to the bottom line, the impact is amplified—both on income and on asset value.

Download the free ebook: The Procurement Strategy Playbook

What is net operating income (NOI)?

Net Operating Income measures profitability before financing costs and taxes, calculated as total property revenue minus all necessary operating expenses. It's the single most important metric for evaluating a property's operational performance.

Revenue components include rental income from units, parking fees and storage charges, service charges, and amenity fees. Operating expenses cover property management fees, insurance premiums, maintenance and repairs, utilities and landscaping, marketing costs, legal fees, and property taxes.

Several costs are excluded from NOI. Debt service doesn't appear because NOI measures operational efficiency independent of financing. Capital expenditures like roof replacements are excluded because they're long-term investments rather than recurring operational costs. Income taxes remain outside the calculation because they vary based on ownership structure.

The formula is straightforward: NOI equals Gross Operating Income minus Operating Expenses.

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The Procurement Strategy Playbook for Modern Businesses

Learn the key pillars of a strong strategy, valuable procurement metrics to track, and initiatives you can start implementing today.

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How NOI impacts property value and business growth

Higher NOI directly increases property market value through a significant multiplier effect. The relationship is linear but powerful because property values are calculated using the capitalization rate formula. Improvements to NOI create outsized impacts on your property's worth.

The cap rate formula demonstrates this relationship: Property Value equals NOI divided by Cap Rate. At a 5.5% cap rate, a $615,000 NOI increase translates to an $11.2 million increase in property value. Every dollar added to NOI creates approximately $18 in property value at this cap rate.

Improving NOI strengthens financing terms for future acquisitions and refinancing. Lenders evaluate loan applications based on debt service coverage ratio, which compares NOI to required debt payments. A higher NOI means you can qualify for larger loans or secure better interest rates.

Reducing expenses to increase NOI delivers dollar-for-dollar improvements, while revenue increases often carry associated costs. If you add $100,000 in revenue by filling vacant units, you'll also incur marketing costs and potential concessions. However, if you reduce operating expenses by $100,000 through better procurement, the entire amount flows to NOI.

Tactics to improve NOI through operational spend

The following strategies target the areas where operational spend has the biggest impact on NOI: procurement, vendor management, accounts payable, maintenance, and financial visibility. Each one puts control back in your hands and delivers savings that flow directly to the bottom line.

1. Centralize purchasing to eliminate rogue spend

When property managers, maintenance staff, and administrative teams purchase supplies independently, they fragment vendor relationships and eliminate volume leverage. Unapproved spending can reach as high as $50,000 per month across larger portfolios, creating budget overruns that directly erode NOI.

Rogue spend compounds in subtle ways. One property orders paint from Home Depot while another uses Sherwin-Williams, eliminating discount opportunities. Maintenance techs buy parts from whatever supplier is most convenient rather than following negotiated contracts. Across a portfolio, these small decisions add up fast.

Centralizing procurement through pre-approved catalogs and standardized vendor lists solves this at the source. Instead of giving staff free rein, you define which products and suppliers are available, at what prices, and within what budget limits. Property management companies using centralized procurement save an average of 5% across categories, with savings on maintenance and office supplies reaching up to 10%. For a portfolio spending $500,000 annually on operational supplies, that's $25,000 to $50,000 in direct NOI improvement.

2. Automate AP workflows to cut administrative overhead

Manual invoice processing is one of the most overlooked drains on NOI. The traditional accounts payable cycle — receiving paper or PDF invoices, entering data by hand, matching invoices to purchase orders, chasing approvals, and scheduling payments — is slow, error-prone, and expensive. Delayed payments lead to late fees. Duplicate payments go undetected. Finance teams spend hours on data entry instead of strategic analysis.

Automating AP workflows eliminates these inefficiencies. When invoice capture, GL coding, and approval routing happen automatically, you reduce labor costs, avoid costly errors, and accelerate the close process. The result is lower administrative overhead that flows directly to NOI, without touching revenue.

3. Consolidate vendors to negotiate better pricing

Vendor fragmentation is one of the most common — and most fixable — sources of margin leakage. When different properties buy from different suppliers, organizations sacrifice bargaining power and pay higher unit costs. A single property spending $5,000 annually with a supplier has little negotiating leverage, but a portfolio spending $100,000 across twenty properties commands attention and favorable terms.

Consolidation starts with visibility. Without centralized purchasing data, it's nearly impossible to see where indirect spend is fragmented. Once you can map spending patterns across the portfolio, you can identify overlapping suppliers, compare pricing, and approach vendors with aggregate volume that justifies better terms.

The benefits extend beyond price. Consolidated purchasing creates stronger vendor partnerships built on predictable, high-volume relationships. In exchange for consistent business, suppliers offer preferential pricing, priority service, and flexibility on payment terms. Reducing the cost of recurring supplies like paint, flooring, and office products by even 10% creates permanent improvements to operating margins that flow directly to NOI.

4. Implement preventive maintenance to avoid emergency costs

Reactive maintenance — waiting for equipment to fail before addressing it — is the most expensive way to manage property assets. Emergency calls typically cost 3-5x more than planned maintenance because they require immediate response, often during off-hours, and the damage is usually more extensive.

A structured preventive maintenance program flips this dynamic. Property management companies reduce repair costs by 30% and boost property value by up to 10% through routine maintenance schedules. Research shows a 30-40% reduction in emergency maintenance calls and a 15-25% improvement in asset lifespan when preventive programs are in place. A $200 HVAC filter replacement today prevents a $5,000 compressor failure next year.

Standardizing maintenance supplies across locations also plays a role. When every property uses the same air filters, paint brands, and repair materials, teams work more efficiently, ordering is simpler, and quality stays consistent. Using historical purchasing data to anticipate seasonal needs — like insulation work in fall to prevent winter pipe bursts — further reduces emergency spend and protects NOI.

5. Gain real-time visibility for accurate forecasting

Waiting for monthly P&L statements to understand spending means discovering budget overruns weeks too late to correct them. By the time you see that a property exceeded its maintenance budget, three more weeks of uncontrolled spending may have already occurred.

Traditional accounting systems tell you what happened last month — not what's happening right now. Real-time spend visibility reverses this dynamic, allowing you to track budgets by property, department, and category as transactions happen. When you catch a $1,000 overspend in week two, you can course-correct immediately. Without that visibility, the same overrun compounds to $5,000 by month-end.

Real-time data also supports more accurate forecasting. Instead of relying on rough estimates, you can analyze actual purchasing patterns to project future expenses by seasonality, vacancy rate, and property type. That level of precision turns budgeting from a guessing exercise into a reliable planning tool — and keeps NOI on track.

Ebook

The Procurement Strategy Playbook for Modern Businesses

Learn the key pillars of a strong strategy, valuable procurement metrics to track, and initiatives you can start implementing today.

Download now

How to increase NOI with Order.co

The strategies above work in principle, but executing them across a multi-property portfolio requires the right infrastructure. Spreadsheets, email threads, and disconnected vendor accounts can't deliver the centralization, automation, and visibility these tactics demand. That's where Order.co comes in.

Order.co's property management platform unifies procurement, accounts payable, and spend management into a single system — giving you the tools to put every one of these strategies into practice.

• Centralized procurement: Pre-approved product catalogs enforce compliance with budgets and brand standards, eliminating rogue spend at the source. Staff order only from approved products at negotiated prices, so every purchase stays on contract.
• AI-powered sourcing: Order.co AI scans nearly 40,000+ vendors to compare prices across suppliers, surfacing cost-saving opportunities that manual processes would miss.

• Consolidated billing: Order.co's AP automation reduces invoice volume by up to 50x by combining all purchases into bills that are fit for your books. GL codes are assigned at the point of purchase, eliminating manual data entry and 3-way matching.
• Vendor consolidation and management: With all purchasing data centralized in one platform, you gain full visibility into where spend is fragmented across suppliers. Strategic sourcing tools analyze that data across your portfolio, highlighting consolidation opportunities and quantifying potential savings. From there, you can manage all vendor relationships in a single place — tracking performance, comparing pricing, and ensuring every property is buying from the right suppliers at the right terms.
• Real-time spend visibility: A centralized dashboard tracks budgets, approvals, and orders across every property in real time — so you can catch variances mid-month and course-correct before they compound.

Results in practice

ARK Homes for Rent stabilized repair and maintenance costs by consolidating purchases through Order.co, gaining visibility into every transaction and locking in volume discounts. Their team cut GL coding time from two to three hours down to five minutes, freeing their controller to focus on financial analysis instead of data entry.

Clinton Management achieved significant time savings and eliminated manual purchase orders for three separate vendors by centralizing procurement through the platform. By reducing to a manageable number of strategic partners, they simplified operations while improving pricing.

Turning operations into a growth engine

Revenue gains are valuable, but operational efficiency offers more control and more immediate impact. You can't force tenants to pay higher rents in a soft market, but you can always improve how you purchase supplies, process invoices, and manage vendors. The combination of direct savings from better procurement, reduced overhead from AP automation, and lower repair costs from preventive maintenance creates a virtuous cycle that strengthens both cash flow and asset valuations over time.

Schedule a demo to see how Order.co can improve your property NOI through centralized procurement, AP automation, and real-time spend visibility.

FAQs

Here are answers to common questions about improving NOI through operational spend management.

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