Question

Property	EGI	Fixed Expenses	Variable Expenses
1	653,000	185,000	222,000
2	438,000	135,000	162,000
3	513,000	147,000	176,400

If you have these three comparable properties, which one of following ratios is most likely to be the expense ratio of you subject property? Please Show Work (NO EXCEL)

Answer 1

Calculation of the total expenses

Total expenses = fixed expenses + variable expenses

Property	Fixed expense	Variable expense	Total expense
1	185,000	222,000	407,000
2	135,000	162,000	297,000
3	147,000	176,400	323,400

Calculation of the Expense ratio:-

Expense ratio = Total expense / Revenue

property	Total expense	Revenue	Expense ratio
1	407,000	653,000	62.33%
2	297,000	438,000	67.81%
3	323,400	513,000	63.04%

here Property 1 have low expense ratio.