Operating Expense Ratio (Rental) Calculator

About this calculator

The operating expense ratio (OER) for a rental property measures how much of gross income gets consumed by running costs: OER = Annual Operating Expenses divided by Gross Rental Income, expressed as a percentage. Operating expenses include property taxes, insurance, maintenance, property management fees and utilities the owner covers, but exclude mortgage principal and interest and capital expenditures. Subtracting operating expenses from gross income also gives net operating income (NOI), the property’s income before debt service.

Real estate investors use OER to judge how efficiently a property is being run and to compare properties of different sizes on equal footing — a typical range runs 35-50% of gross income for a well-managed residential rental, with anything creeping toward 60%+ signaling either high costs, an aging building, or an underpriced rent roll that needs review. Lenders and appraisers also reference it as an input when evaluating an income property’s cash flow.

This calculator takes your property’s annual operating expenses and gross rental income and returns the OER along with the resulting NOI.