The operating expense ratio is total operating expenses divided by effective gross income. LA multifamily typical range: 32–38% on stabilized inventory.
Calculate as operating expenses (taxes, insurance, utilities, maintenance, management, reserves) divided by effective gross income. Ratios below 30% suggest understated expenses; ratios above 40% suggest inefficiency or unusual cost structure.
LA multifamily buyers in 2026 reconcile stated operating expense ratios against tax returns and market norms. A 25% OpEx ratio on a listing signals the seller has excluded costs the buyer will incur. Expect buyer adjustments to 35% during underwriting.
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