The operating expense ratio for income property is typically?

The operating expense ratio for income property is typically understood to be under 100%. This ratio is important for property investors and appraisers as it reflects the proportion of total income that is used to cover operating expenses.

When the ratio is below 100%, it indicates that the income generated by the property is sufficient to cover all the operating expenses, leaving potential net income for the owner or investor. This is a favorable condition and suggests that the property is operating efficiently.

If the ratio were to exceed 100%, it would indicate that the operating expenses exceed the income generated, which could signal financial distress or inefficiency in the property’s management. This could lead to negative cash flow scenarios that are detrimental to investment returns.

The other options present ranges or estimates that do not align with typical operating expense ratios for income properties. Generally, a well-managed property should aim for an operating expense ratio below 100%, as this reflects sound financial management and the potential for profitability.