I am evaluating the expense ratio on a park I have under contact and have a dilemma. The expense ratio as stated by the seller has the utilities included in both the income and expense categories. There is a bit of a profit margin in the utilities billing because he is allowed to legally bill at residential rates but is able to buy at cheaper corporate rates. The expense ratio with the utilities included has a little higher ratio than normal but the expense ratio with the utilities completely taken out has a very low expense ratio. Should I use the expense ratio with utilities included because of the markup?
Thanks in advance for all comments,