Break-Even Occupancy Rate

Minimum occupancy rate needed to cover all expenses and debt service.

Example Result

Sample Data

106.76%

Based on a sample $385,000 property with $2,850/month rent, 20% down, 7% interest rate.

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Break-Even Occupancy Rate Formula

(Operating Expenses + Debt Service) / Gross Potential Rent x 100

($11,924 + $24,590) / $34,200 x 100

106.76%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a break-even occupancy rate of 106.76% at Purchase (Month 0). This is a critical risk metric. If break-even occupancy is 90% and the market vacancy rate is 8%, you have only a 2% cushion. Properties with lower break-even rates are more resilient to economic downturns.

Where This Value Comes From

Break-Even Occupancy Rate is not entered directly — it is calculated from Total Operating Expenses, Debt Service, and Gross Potential Rent. See the formula breakdown above and the detailed inputs below.

Inputs That Determine Break-Even Occupancy Rate

Total Operating Expenses

Sum of all property operating costs (taxes, insurance, management, maintenance, CapEx, HOA, utilities)

$11,924

Purchase

Debt Service

Total annual mortgage payments.

$24,590

Purchase

Gross Potential Rent

Total annual rental income assuming full occupancy.

$34,200

Purchase

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Why It Matters

This is a critical risk metric. If break-even occupancy is 90% and the market vacancy rate is 8%, you have only a 2% cushion. Properties with lower break-even rates are more resilient to economic downturns.

Detailed Explanation

The break-even occupancy rate shows what percentage of units must be occupied (and paying rent) to cover all operating expenses and debt service. Below this occupancy, you are losing money each month.