What is Operating Expense Ratio (OER)?

What is Operating Expense Ratio?

Operating Expense Ratio (OER) shows what share of gross rent is consumed by the property’s running costs, before financing is even considered:

OER = Operating Expenses / Gross Rent × 100

Operating Expenses here means rates, insurance, land tax, body corporate/strata, property management fees, maintenance and similar recurring costs — it deliberately excludes the mortgage payment, which is a financing decision rather than a property-running cost.

Where you’ll see it

Property → Cashflow tab, in the Operating Expenses card footer, directly under the property’s total expenses for the year.

Why exclude the mortgage?

Two identical properties can have very different mortgage payments depending on the buyer’s deposit, loan term and interest rate — none of which says anything about how efficiently the property itself runs. OER strips financing out entirely, so it’s a fair way to compare running-cost efficiency between properties, or to track whether a single property’s costs are creeping up over time, independent of what’s happening with your loan.

How to read it

A lower OER means more of every rent dollar survives running costs before debt service — a higher OER means less does. There’s no single “good” number since it varies a lot by property type (body corporate–heavy apartments typically run higher than standalone houses) — it’s most useful compared against similar properties, or against the same property’s own OER over time.