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Vacancy Break-Even Rate Calculator
Every rental has a break-even rent — the level at which monthly income equals monthly cost after vacancy loss. Drop below it and you're subsidizing the property. This calculator finds the floor so you know when pushing rent vs accepting a lower tenant is the right call.
Break-even rent
$2,420
Market rent cushion
-$20
Cushion %
-0.8%
Total monthly cost
$2,275
Annual cash at market rent
-$228
How the math works
Total cost $2,275/mo ÷ (1 − 6% vacancy) = $2,420 break-even rent. Market rent $2,400 is $20 BELOW break-even — this property loses money under current assumptions. Either raise rent 1% or cut operating costs.
At healthy 15% cushion, break-even should be ~$2,085 on a $2,400 market rent — that comes from lower debt service, lower tax, or leveraging a shared management structure.
How to Use
- Enter monthly debt service, property tax, insurance, and management/maintenance.
- Enter expected vacancy rate.
- See break-even monthly rent, % cushion vs market rent, and annual cash flow at break-even.
Frequently Asked Questions
What's a healthy break-even cushion?
Market rent 15-25% above break-even. That means a vacancy spike or rate rise won't push you negative. Under 10% cushion: fragile. Over 40% cushion: either heavily under-leveraged or underpriced rent (leaving money on table).
Does break-even include capex?
Best practice: yes. Adding $200-$400/mo capex reserve is honest. Excluded from 'operating break-even' but should be included for 'true economic break-even.'
Why does vacancy matter here?
The formula divides total cost by (1 − vacancy %). A 5% vacancy means you need to charge ~5.3% higher rent to break even. A 10% vacancy = 11% higher. Vacancy assumption significantly shifts the floor.
How do I use this at negotiation?
Know your number before renewal negotiations. If a tenant asks for a $100/mo cut and you're $300 above break-even, that's easy. If you're $50 above, that cut puts you underwater.
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