Breakeven Ratio

Percentage of gross rent needed to cover all expenses and debt service.

Example Result

Sample Data

107.41%

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

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Breakeven Ratio Formula

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

($12,146 + $24,590) / $34,200 x 100

107.41%

What This Means

A sample property priced at $385,000 with $2,850/month rent has a breakeven ratio of 107.41%. This metric directly shows your risk tolerance. A 90% breakeven ratio means even a small vacancy increase pushes you into negative cash flow. Lenders typically want to see breakeven ratios below 85%.

Where This Value Comes From

Breakeven Ratio is not entered directly — it is calculated from Gross Potential Rent, Annual Debt Service, and Total Operating Expenses. See the formula breakdown above and the detailed inputs below.

Calculated From

Breakeven Ratio is calculated using these inputs:

Gross Potential Rent

Total annual rental income assuming full occupancy.

$34,200

Annual Debt Service

Total annual mortgage payments.

$24,590

Total Operating Expenses

Sum of all property operating costs

$12,146

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Why It Matters

This metric directly shows your risk tolerance. A 90% breakeven ratio means even a small vacancy increase pushes you into negative cash flow. Lenders typically want to see breakeven ratios below 85%.

Detailed Explanation

The Breakeven Ratio shows what percentage of gross potential rent is consumed by operating expenses and debt service combined. A ratio of 85% means you need 85% occupancy just to cover costs.