The operating expense ratio (OER) measures the proportion of a property's gross income consumed by operating costs. It is calculated by dividing total operating expenses by effective gross income. A well-managed single-family rental might have an OER of 35-45%, while multifamily properties typically run 45-60% and commercial properties vary widely. Investors should compare a property's OER against market benchmarks to identify inefficiencies or unrealistic pro forma assumptions. A high OER relative to comparable properties might signal deferred maintenance, poor management, or inflated expenses that a new owner could optimize.