The formula to calculate the Housing Expense Ratio is:
\[ \text{HER} = \frac{\text{PE}}{\text{PI}} \]
Where:
The Housing Expense Ratio is defined as the ratio of the sum of all property expenses to the pretax income.
Let's consider an example:
Using the formula to calculate the Housing Expense Ratio:
\[ \text{HER} = \frac{2000}{8000} = 0.25 \]
This demonstrates that with property expenses of $2,000 and a pretax income of $8,000, the Housing Expense Ratio is 0.25 or 25%. ✅
