The percentage of gross rental income consumed by operating expenses.
The operating expense ratio (OER) measures how efficiently a rental property is run by comparing operating expenses to gross rental income. A lower ratio means more of each rent dollar flows through to NOI. OER excludes mortgage payments, depreciation, and capital expenditures — it focuses purely on day-to-day operating costs.
OER = (Operating Expenses ÷ Gross Rental Income) × 100Operating expense ratio equals operating expenses divided by gross rental income, expressed as a percentage.
A property generates $36,000 in annual gross rent and has $14,400 in operating expenses (taxes, insurance, maintenance, management, HOA). OER = ($14,400 ÷ $36,000) × 100 = 40%. This means 40 cents of every rent dollar covers operating costs.
Richify automatically calculates operating expense ratio and other key real estate metrics for every property in your portfolio. Instead of plugging numbers into spreadsheets, you get instant analysis with built-in AI-powered insights to help you spot trends and opportunities across your holdings.
Annual rental income minus operating expenses, before mortgage payments.
A property's annual net operating income as a percentage of its purchase price.
The percentage of gross rental income needed to cover all operating expenses and debt service.
The net cash a rental property generates after all expenses including mortgage payments.
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