For anyone that sees this, here is a helpful definition from https://www.proapod.com/Articles/operating-expenses.htm
Simple Definition
Operating expenses are ongoing costs to maintain and keep a rental property investment in service. In other words, they're the costs that affect the day-to-day operation of the investment and are considered necessary to keep the revenue stream flowing.
Here's a brief overview of the types of costs you want to include as an operating expense, as well as those expenses that you want to exclude.
1. INCLUDE expenses like these:
Property taxes
Property insurance
Water and sewer
Utilities
Garbage collection
Property management
Maintenance and repairs
Landscaping
Pool service
These are legitimate operating expenses because they affect the day-to-day operation of the investment and contribute to the investor's ability to rent the units. Other examples would include costs for administrative and accounting, telephone, supplies, snow removal, janitorial service, pest control, advertising and so on.
2. EXCLUDE these expenses:
Debt service
Investor income taxes
Replacement reserves
Capital improvements
Depreciation
These are not legitimate operating expense because they are not directly related to the investment property's core operations. What the owner pays in federal income taxes, for instance, would not affect the property's ability to produce rental income.
