The operating expense ratio (OER) shows what share of rental income is eaten by running costs. Enter monthly operating expenses and monthly gross income.
OER = operating expenses ÷ gross operating income × 100. Operating expenses exclude the mortgage and income tax. Many rentals run an OER of roughly 35–50%.
OER measures how efficiently a property runs: the lower the ratio, the more of each rent dollar reaches NOI. It uses operating costs only — tax, insurance, management, repairs, maintenance, utilities — and excludes the mortgage. A typical rental sits around 35–50%; a rising OER over time is a signal to review expenses, while an unusually low one may mean costs (like maintenance reserves) are being understated.
Many residential rentals run an OER of about 35–50% of gross income. Lower is better, but a figure that looks too low may mean some expenses aren't counted.
No. OER uses operating expenses only and excludes financing and income tax, so properties can be compared regardless of how they're funded.
Increase rent toward market, reduce avoidable costs, review insurance and management fees annually, and cut vacancy — all raise the income left as NOI.
RentFlow categorises every expense per property so your OER and NOI update automatically. Free to start.
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