Operating Expense Ratio (OER)
Metric representing the cost efficiency of property operations.
Operating Expense Ratio (OER)
OER measures the cost of operating a property relative to the gross operating income.
Formula
OER = (Operating Expenses / Gross Operating Income) * 100
What this tells you
OER compares operating expenses directly to gross revenues. A lower OER means that the property is highly efficient at translating rental revenues into net cash.
How to improve it
- Reduce Utilities Waste: Install water-saving fixtures or smart thermostats to cut utility costs.
- Audit Recurring Contracts: Periodically renegotiate contracts for services like cleaning, lawn care, or insurance.