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Expense Ratio Calculator
Compute the operating expense ratio (opex ÷ gross income) and total expense ratio (opex + debt service ÷ gross income) for a rental. Benchmark against typical residential rental ranges.
Operating expense ratio (OER)
43.0%
opex / gross income
Total expense ratio
93.0%
opex + debt / gross income
Annual cash flow
$2,700
Capex treatment
Capex included in opex
Reading the number
Healthy for newer or single-family rentals.
OER is the standard expense efficiency benchmark for residential rentals (35–50% common). Total expense ratio adds debt service — useful when comparing leveraged returns or sizing payment burden against income.
How to Use
- Enter annual gross income (effective gross income — collected rent + other income).
- Enter annual operating expenses (taxes, insurance, management, maintenance, utilities, capex if conservative).
- Choose whether capex is included so the benchmark interpretation is correct.
- Enter annual debt service to see total expense ratio alongside OER.
- Read OER vs the benchmark range — 35–55% is typical for residential rentals.
Frequently Asked Questions
What's a healthy OER for a rental?
35–45% for newer or single-family rentals. 45–55% for older small multifamily. Above 55% suggests inefficient operations or below-market rent. Below 35% usually means expenses are missing — verify your inputs.
Should I include capex?
For a conservative analysis, yes — include a capex reserve in opex. Many lenders and brokers exclude capex from OER for marketing purposes. Be explicit about which version you're using.
What's total expense ratio used for?
It shows how much of gross income is consumed by operations and debt combined. The remainder is your free cash flow margin. Useful for stress testing — what if income drops 10%?
How does OER relate to NOI?
NOI margin = 100% − OER. An OER of 45% means a 55% NOI margin on gross income. Cap rate is then NOI ÷ value, so OER directly affects valuation through NOI.
Related Calculators
Operating Expense Ratio Calculator
Pure OER calculator — same denominator, opex only.
Net Operating Income Calculator
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DSCR Calculator
Make sure NOI clears the lender's DSCR floor.
Cash Flow per Door Calculator
Translate ratios into per-unit dollar cash flow.
Debt Yield Calculator
Lender-side test using NOI ÷ loan amount.
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