As an experienced multifamily property owner, I’ve navigated through all sorts of economic climates, and let me tell you—keeping your net operating income (NOI) stable during tough times is crucial. According to The Real Deal, Nashville Investors can expect rents to continue to fall as the oversupply of units will take time to work itself out. When rents are falling it’s time for property owners to take action.  Here are five actionable tips I’ve personally implemented to maintain profitability in my properties.

Dave Childers speaking at an event for Multifamily Professionals in Nashville, TN

1. Focus on Tenant Retention

First things first, keeping your tenants happy is key. It’s a simple truth that it costs five times more to attract a new tenant than to retain an existing one. Why are we so quick to offer incentives to new tenants and forget about the ones we already have? Before you think about dropping rent, consider offering a one-time incentive, like half off their next month’s rent for renewing their lease. Small upgrades, like new light fixtures or blinds, can also make a big difference. These improvements not only enhance the living experience for your tenants but also add value to your property.

2. Negotiate Your Financing

Interest rates fluctuate, and so should your banking strategies. Do you have a ballooning payment approaching? If your mortgage rates have increased, it’s time to shop around. Some banks are hungrier for business than others and may offer you a better rate. Even if you decide not to switch banks, you can use a better offer as leverage with your current lender. Also, consider restructuring your existing loans. Extending your amortization period can significantly reduce your monthly payments, freeing up cash flow. BONUS: One other tool at your disposal is your cash deposits, so offering to move your deposits to the bank may incentivize them to offer you a lower rate on your loan.

3. Assess Your Property Taxes

If your properties are assessed higher than their current market value, it’s time to challenge that assessment. Most municipalities have specific periods during which you can contest your property tax valuation—make sure you know when that is and be prepared to present your case. But as prices of homes and small multifamily drop make sure you have comps that support your claim and take action to reduce your tax burden.

4. Review Your Insurance Costs

Insurance is a necessity, but that doesn’t mean there aren’t ways to save. Talk to your insurance agent about raising your deductible if you haven’t had recent claims, which could lower your premiums. Also, consider addressing any property issues that might be increasing your insurance costs. Simple fixes like updating handrails or installing smoke detectors can reduce your risk and your premiums.

5. Consider Self-Management

If you’re running a small operation, self-managing your property might be a viable option. It’s not as daunting as it sounds if you have a reliable network of service providers like cleaners and handymen. Co-managing with your current management firm is another cost-effective strategy. Help them source less expensive suppliers or take on some of the management tasks yourself. After debt servicing, property management tends to be one of the highest expenses you have as a multifamily investor. Evaluate where your time and subsequently your money should be directed. Perhaps a season of property management will be required to help weather a difficult economic time.

Bonus Tip: Optimize Your Utilities

Installing low-flow toilets, LED lighting for common areas, and maintaining your heating and cooling systems can significantly reduce your utility bills. These are straightforward fixes that can lead to substantial savings.

Conclusion

So there you have it—five (actually six) no-nonsense strategies every multifamily property owner should be implementing to cut costs and boost net operating income. Start by keeping your current tenants happy to avoid the high cost of turnover. Use your existing rent roll as a bargaining chip to negotiate better financing terms. Be vigilant about your property tax assessments and don’t hesitate to challenge them if they seem off. Look into tweaking your insurance policy to get those premiums down—maybe by raising your deductible or fixing minor issues that could be hiking up your rates. And if you’re up for it, consider taking on some property management tasks yourself; it’s not as tough as it sounds and can save you a good chunk of change. Stick to these principles, and you’ll see your NOI stay robust, even when times get tough.