Appeal assessments and re-bid insurance
When it may fit: Taxes and insurance rose sharply.
Evidence needed: Assessment notices, comparable values and insurance quotes.
Trade-off: Savings are uncertain and slow.
Real Estate Intelligence Brief
How to Investigate Rising Operating Expenses
Expenses that rise faster than rent erode NOI even when every unit is full. Knowing which lines are growing, and which of them can be influenced, is the starting point.
1. The business problem
Operating expenses are climbing. Which of them can we actually do something about?
Some operating costs are within a property manager’s reach, such as maintenance, utilities and administration. Others, notably property taxes and insurance, are set largely outside the owner’s control. Treating them all alike wastes effort.
Sorting the increase by line, and then by how much influence the owner has, directs attention to where savings are possible.
2. What the evidence can reveal
An expense review separates growth by line and by controllability:
- Calculated Each expense line against the prior year, in dollars and in percent.
- Calculated Expense per occupied unit-month, which adjusts for changes in occupancy.
- Calculated Share of the total increase that each line accounts for.
- Information gap Contract terms, assessment changes, insurance renewals and vendor pricing behind each line.
Expenses that grow faster than rents compress margin, and expenses that grow faster than occupied units signal an efficiency problem.
3. Investigate the problem
In the synthetic portfolio, Calculated operating expenses rose 15.8%, from $7.90M to $9.15M, while rental revenue rose only 5.6%. NOI fell from $4.70M to $4.15M, and the NOI margin from 37.3% to 31.2%. Expense per occupied unit-month rose from $596 to $676.
Calculated Taxes and insurance rose 20.7% and accounted for 48% of the increase. Maintenance rose 17.4%, utilities 11.5% and management and admin 7.1%. The two largest increases are in taxes and insurance and in maintenance.
Hypothesis Taxes and insurance are only partly controllable: assessments can sometimes be appealed and insurance can be re-bid, but neither can be cut at will. Maintenance and utilities are more within the operator’s reach. Information gap Reasons for each increase, such as an assessment change or a spike in repairs, are not in the demo. In the scenario, a 1% change in taxes and insurance moves NOI by about $35K and in maintenance by about $27K, less than a 1% change in rent at about $133K.
4. Explore the interactive experience
Investigate it yourself.
Property Portfolio Dashboard: a property portfolio dashboard with occupancy and NOI, a scenario simulator for occupancy, rent and expenses, evidence-linked answers from APIS, and a sample brief, all on synthetic data.
The experience below is built on a synthetic eight-property portfolio, “Demo Property Group.” Nothing in it is real, and nothing in it is an investment recommendation.
- In the cost table, select Taxes & insurance and then Maintenance. Which grew faster?
- In the Scenario tab, lower maintenance cost by 5% and note the effect on NOI.
- Ask APIS which expense categories explain the NOI margin change.
5. Evaluate possible solutions
The response depends on how controllable each line is.
6. What leadership should do next
Questions to answer
- Which lines grew most?
- Which can be influenced?
- What drives the increase?
- What can be passed through to tenants?
Data to gather
- Expenses by line and property
- Assessment and insurance history
- Vendor contracts
- Lease terms
Steps to take
- Rank lines by increase.
- Separate controllable from not.
- Act on the largest controllable.
- Review quarterly.
7. Engage Two Pillars
Get a Clearer Picture of Your Property Portfolio
Two Pillars can help property owners, operators and investors examine property performance, expenses, investment scenarios and portfolio strategy using your own data. Nothing here is an investment recommendation. A good first step is an operating-expense review that separates controllable cost from the rest.
Sources and data notes
- The organization, its figures, and every number in this article and its interactive experience are synthetic and illustrative. They are not real data, a benchmark, or a forecast.
- Reviewed October 2026. This article describes an approach to investigation. It does not replace review by qualified professionals.