Operating Expense Ratio (OER)
OER is total operating expenses divided by gross operating income, measuring the percentage of revenue consumed by operating costs.
| Calculation | Formula |
| OER | (Operating expenses / GOI) times 100 |
| Alternative base | Operating expenses / Effective gross income |
| Lower is better | More revenue flows to NOI |
| Benchmark comparison | Evaluate efficiency vs peers |
| Operating Expenses Included | Excluded |
| Property management fees | Mortgage payments |
| Maintenance and repairs | Capital improvements |
| Insurance | Income taxes |
| Property taxes (if applicable) | Depreciation |
| Utilities (if owner-paid) | Owner's personal expenses |
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