Expense Rate
expense rate=expenses/price: where expenses correspond to annual expenses for the property. You would expect some money on repairs, local property tax, insurance, management, and any other expense that are commonly deductible. Depending on area, you can expect (0.5%-3%) property tax, 0.5%-1.5% insurance, 1% management cost. Repairs will be anywhere between 0%-1% on good years, 2% on less luck years. This means an expense ratio of 3%-6% for the property. You should look for properties with low fixed expense ratio, as having high expense will make your situation difficult if the gross income is lower than anticipated due to vacancy.
This is one of the property key profitability measures.
