In the multifamily property management sector, financial metrics are crucial for gauging a property's performance. One such metric is the Operating Expense Ratio (OER).???? What is OER?OER represents the proportion of a property's potential income consumed by its operating expenses. It's calculated by dividing the property's operating expenses by its potential gross income.???? Why is OER Important?A lower OER indicates that a property is being m ...
Susan E Weston
Actually, I would tweak that slightly and remove the "potential" I agree - it is incredibly important! The formula is to take total operating expense (OE) and divide by total revenue (EGI) Parenthesis for CAM terms. You'll get a percentage. Jason is right the percentage tells you for every dollar walking in your front door, XX cents are going to pay the basic bills - keep people paid, the lights on, etc. Older or smaller properties can be 40-60%, maybe higher. NAA Income and Expense Survey reads just under 41%. All kinds of circumstances can change that though. And remember, you still haven't paid debt service, capital items or made any cash flow! Good topic, Jason!
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04 DecEvent starts in:
