Rental Operating Expense Ratio Calculator

About this calculator

The operating expense ratio (OER) measures how much of a rental property’s income gets eaten up by running it, calculated as annual operating expenses ÷ gross rental income (expenses like property tax, insurance, maintenance and management fees, excluding the mortgage itself). Net operating income (NOI) — gross income minus those same operating expenses — is the property’s profit before debt service and is what the ratio is effectively measuring against.

A lower OER generally means a more efficiently run property, since more of every rental dollar collected flows through as profit rather than upkeep; investors typically compare a property’s OER against similar properties in the same market to spot red flags like deferred maintenance or bloated management fees. Real estate investors, property managers and lenders underwriting a rental purchase use OER and NOI together to judge operating efficiency and estimate cash flow.