Find the minimum occupancy rate needed to cover all expenses. It's (Operating Expenses + Debt Service) ÷ Gross Potential Income. The lower your break-even, the more resilient your investment.
Break-Even Occupancy
35.2%
Must be occupied Can be vacant
What does this mean?
A break-even below 60% means this property can weather significant vacancy and still cover all costs. That's an extremely resilient deal with a wide margin of safety.
Break-even occupancy is the minimum percentage of a property that must be occupied for rental income to cover all operating expenses and debt service. It's a critical risk metric — the lower the break-even, the more resilient your investment.
Why it matters: Most investors focus on returns at full occupancy, but break-even occupancy tells you how much vacancy you can absorb before losing money. A property with a 70% break-even can survive 30% vacancy. A property with a 95% break-even is one tenant away from trouble.
Target benchmarks: Most lenders want to see break-even occupancy below 85%. Best-in-class stabilized properties often achieve 65–75%. Above 90% is a red flag in underwriting.
How to improve it: Increase rents, add ancillary income (parking, laundry, storage), refinance to lower debt service, or find operational efficiencies to reduce expenses. Every dollar you save on expenses drops straight to the break-even line.
Keep running the numbers
Know your minimum. Now see what happens above and below it.