Finance category
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Break-Even Occupancy Calculator
Find the lowest occupancy rate your rental can sustain while still covering operating expenses and the mortgage. The lower the break-even, the bigger your margin of safety.
Property income
Debt service
Break-even occupancy
103.9%
below this, you're losing money
Margin of safety
0.0%
cushion above break-even
Monthly debt service
$1,774
Monthly cushion at 100% occupancy
-$94
Reading the number
Very thin margin — a single month of vacancy or turnover cost would put you in the red. Reconsider price, rent, down payment, or rate.
Break-even occupancy = (operating expenses + debt service) / gross potential rent. This is one of the single best sanity checks for a rental — if you don't clear it comfortably, the deal is fragile.
How to Use
- Enter the rent per unit and the number of units.
- Enter monthly operating expenses — taxes, insurance, management, maintenance reserve, utilities you pay.
- Enter the loan amount, interest rate, and term so the tool can size debt service.
- Review break-even occupancy — below this percentage, the property loses money.
- Compare to your market's typical stabilized occupancy (often 92–96%) — a 10+ point margin of safety is healthy.
Frequently Asked Questions
What's a good break-even occupancy?
Under 80% is considered strong. 80–90% is acceptable but tight. Above 90% means a normal soft month can wipe out the year's cash flow. Commercial lenders often require break-even below 85%.
Why does break-even occupancy matter?
It's the single best margin-of-safety test for a rental. A property that breaks even at 92% occupancy is fragile — one turnover with a 45-day vacancy can push you into the red. A property that breaks even at 70% is resilient.
Does break-even include capex reserves?
Ideally yes. Some investors treat capex separately because it's lumpy rather than monthly. Including a capex reserve in operating expenses produces a more conservative, more realistic break-even figure.
How does break-even change when interest rates change?
Higher rates raise debt service, which raises the break-even occupancy percentage. A 1% rate increase on a 30-year loan can push break-even up 3–6 points depending on leverage. That's why rate shopping and fixed-rate financing matter for landlords.
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Break-Even Calculator
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Break-Even Rent Calculator
Solve for the minimum monthly rent needed to cover operating expenses and debt service, plus the rent that hits a target cash flow.