Portfolio Break-Even Occupancy Calculator

Break-even occupancy is the floor for debt coverage. This calculator derives it portfolio-wide.

Potential gross income

Operating expenses

Annual debt service

Break-even occupancy

78.82%

Cushion at 90% occupancy

11.18%

Revenue break-even

$6,700,000

How the math works

Break-even = (opex + DS) ÷ PGI. Any occupancy above this = positive cash flow.

Target portfolio break-even 10-15 points below current occupancy. Tighter cushion makes the portfolio vulnerable to tenancy shocks; wider cushion preserves distributions through downturns.

How to Use

Enter potential gross income.
Enter operating expenses.
Enter debt service.
Read break-even occupancy.

Frequently Asked Questions

Break-even math?

(Expenses + debt service) ÷ potential gross income. Below this occupancy, property operates at loss. Cushion of 10-15% above break-even is standard underwriting target.

Portfolio application?

Compute portfolio-weighted break-even. If 80% actual occupancy vs 68% break-even, cushion is 12%. A 12% cushion absorbs a 120-bp vacancy shock before cash flow turns negative.

Improving cushion?

Reduce operating expenses, extend amortization (lower DS), or grow rents. Each 5% rent growth shifts break-even down 3-4 points on typical deals. Most direct lever is rent.

How do institutional LPs use this?

Institutional LPs expect sensitivity tables at every underwriting — base case plus at least two stress scenarios. Submit this output alongside traditional pro formas. LPs read quickly for two things: does the base case clear target IRR, and does the stress case produce positive equity multiple. If both yes, deal is investable. If stress goes negative, more equity or a lower purchase price is needed.