Operating Expense Ratio Calculator

How to Use This OER Calculator

Enter your annual operating expenses (everything except mortgage and depreciation) and your annual gross rental income. The calculator shows what percentage of your income goes to operating the property. Lower is better: it means more of your rental income becomes profit.

OER Formula

The Operating Expense Ratio shows how much of your rental income is eaten by expenses. Lower is better. Benchmarks: 35-45% for long-term rentals, 50-65% for short-term rentals. Excludes mortgage payments and depreciation.

Worked Example

Your rental generates $42,000/year in income. Operating expenses total $16,800 (property tax $4,200, insurance $2,100, maintenance $3,600, management fees $3,360, utilities $2,040, other $1,500). OER = $16,800 / $42,000 = 40%. This is within the healthy range for a long-term rental.

What is a Good OER?

For long-term rentals (LTR), an OER of 35-45% is typical and healthy. For short-term rentals (STR/Airbnb), 50-65% is common due to higher cleaning, furnishing, platform fees, and turnover costs. Below 35% often means you're underinvesting in maintenance (which catches up later). Above 65% for an STR or above 50% for an LTR suggests expenses need attention.

Factors That Affect OER

The biggest expense categories are usually property taxes, insurance, and maintenance. Property management fees (8-10% for LTR, 15-25% for STR) have a huge impact. For STRs, cleaning fees, supplies, platform commissions, and utilities are significant additional costs. You can lower OER by negotiating insurance, contesting property taxes, self-managing, or increasing income (raising rents) to spread fixed costs over a larger revenue base.